HMO properties for sale are becoming more and more apparent as the canny investor realises the returns which can be made. An HMO property for sale will usually mean the house is already being run as a home of multiple occupation and therefore ready for a new landlord to takeover with the existing tenants inside.
What investors should always do first is check out the cost of insuring this type of property. An HMO property is totally different to a standard let where there is just one family occupying the house. These homes can house all different types of tenants ranging from homeless tenants to student tenants.
Not only this, but many landlords now like to sub let their HMO property to property management companies so they can get what is called guaranteed rent. This means that a property management company will take the property in for a certain period ie: 2 years and will give the landlord £X amount of money each month until the contract expires.
This is a great way to guarantee an income but it can be an issue with some insurers. The risk here is that the landlord has no control over what the home is being used for and what tenant types will be housed. It is crucial that insurers are always kept up to speed with tenant type as many types can be declined due to their risk for certain insurers.
So when giving your property to a managing agent, check what tenants will be placed in the home of multiple occupancy. If the property management company says it could be any tenant type, then you will need to get an insurance policy which will cater for this. It is not easy and there are only a few insurers that will accept and provide a comprehensive policy without littering it with endorsements.
It pays to look around
Landlords insurance or insurance for rental property for HMO’s can be a minefield so do not just take the cheapest deal for your large investment, make sure you have a watertight policy and all the necessaries are declared and covered. With any type of policy you should always read it thoroughly to make sure you fully understand what you will be covered for and what you will not be. If in doubt it always pays to ask as you are better to know now than at the time of a claim.
