RENT TO HMO or RENT TO SA?

Rent to HMO vs Rent to SA? Which strategy is more profitable?

For anyone who steps new into the property, ask some common questions about rent to HMO and SA:

“I am confused! What should I do? Rent to HMO or Rent to SA? Where’s more money? Which one is profitable?”

Today, we bring you the answers of these questions. We will explain to you what is Rent to HMO and Rent to SA. We will talk about the pros and cons of it and we are going to cover many topics.
Before we start, let’s get this clear, this blog is only a piece of advice, an opinion based on facts. For anyone starting a new in this business, some research on these topics beforehand is highly recommended.

So what is the difference between HMO and SA?

Rent to HMO (House in Multiple Occupations)

Rent to HMO is a cash-flowing strategy. In easy and simpler words, HMO is simply renting a house from a Landlord and then giving it on rent to multiple tenants and generating a higher return at the end of each month. Say you rent a house having 4 bedrooms from a landlord with a monthly rent of £1600. Then, instead of giving the whole property on rent to a single tenant, you split up the property. You can now give a single bedroom on rent charging £600 per month. Similarly, if you give the other rooms on rent, you generate a higher return. You pay your guaranteed rent to the landlord, the rest of each month is your profit.

Rent to SA (Serviced Accommodation)

On the other hand, Serviced Accommodation is offered on a short-term period. This type of property renting is the target of tourists, corporate clients and construction workers. It is a very popular strategy.
You can find these types of offerings on Air BnB, booking.com and of course, you can find them cheaper at none other than Progress Property Services.

Managing the Properties

When it comes to managing properties, surely Rent to HMO wins this one. HMO properties are comparatively easy to manage and maintain. With HMO property you do all your struggle in a single go i.e. you market your property, find tenants and let them in. Then, once your tenants are in, for at least six months, a bit longer in some cases, you are at ease. You don’t have to find new tenants in a short period. You don’t have to maintain the property as much as you did when it was empty. Unlike Rent to HMO, managing Rent to SA properties is a bit stressful and becomes hectic sometimes. With SA, you get tenants for a day, two nights, and three nights, so you are constantly struggling to advertise your property to find new tenants. You take all the struggle to manage your SA property.

Management – In terms of money

It has been observed that in HMO-based properties, there is a higher percentage of profit gains as compared to SA properties. The obvious reason comes out to be maintenance. In HMO properties, you let out a property for a longer time and you don’t have to clean and maintain it every time. Whereas in SA-based properties, every time a tenant leaves, a part of your income goes into cleaning the property to make it more presentable for the upcoming tenants. You list your properties on different platforms and every time your property lets out, you have to give 15% of the online booking percentage to these platforms.

Management- In terms of Time

Time investment plays a major role in renting properties. In SA properties you have to invest and give a lot of time, again and again, to market and advertise your properties on different platforms to let it out. You have to be at the top of your game to win in the market. SA becomes like a full-time job. On the other hand, with HMO properties you have to struggle less and invest less time to find tenants that stay at your property for a longer period.

Profits

Rent to HMO and Rent to SA are both cash-flowing strategies and it entirely depends on your marketing strategies that make you money. According to experts, SA gives you a more edge on the revenue side. You earn more in SA because tenants pay for a day, and two nights instead of a month.
Say you rent out an HMO property for £750 and you charge £80 per night in an SA-based property. Where do you earn more? It’s quite obvious. Although SA takes a lot of struggle and time but pays you off.

Risks

Both Rent to HMO and Rent to SA have their own benefits and risks. If we compare them both then according to experts it has been noticed that there are more risks involved in letting out SA properties. The reason is that with SA properties you have to market them throughout the year. Then sometimes, a season comes where you don’t find tenants for a long period of time, thus you have to maintain your property from your profits. This is not the case with Rent to HMO. In HMO properties, tenants are there for longer period of time so chances of the property to be vacant for a longer period decreases.

Finding the right properties to let out

For SA, smaller properties like one bed flat or a two bed flat is worth it. This type of smaller properties can easily be let out. You can also find these on different platforms or hire an agent that can do all the work for you. So, finding SA properties are much easier because more of these are available.
On the other side, it is harder to find HMO properties. They are few in numbers as compared to SA. You can still find them with efficient methods and with the help of agents.

Summary

To conclude we would say that Rent to HMOs and Rent to SAs, both have their pros and cons. It totally depends upon your efforts that profit you. The amount of time you can give and the efficient and productive methods you use.

Rent to HMO is better if you don’t have much time and want to get the most out of it. It can generate higher returns if appropriate techniques and methods are used. If you have got more time to invest in and market your SA properties, serviced accommodation is the right option for you. Sometimes it may take longer, but SA properties can give you more profit.


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