Single Lets vs. Multi Lets (HMOs)

Which Investment is More Profitable?

In this video, we dive into the debate between single-lets and multi-lets, also known as Houses in Multiple Occupation or HMOs.

There’s been a lot of hype around these strategies lately, and for good reason. But which one is the best for you? Let’s find out!

Single Lets

A single let does not necessarily mean renting to just one person; it refers to a property with a single tenancy, typically rented by an individual, couple, or family.

Single lets are great for those looking for a generally low-maintenance and hassle-free investment. They require less time and effort in sourcing and managing tenants. However, it’s important to note that single lets often have lower returns and yields compared to multi-lets.

Multi-Lets (HMOs)

In this strategy, you have multiple tenants sharing one property. Each tenant rents a single bedroom and shares communal areas such as the lounge, kitchen, and bathroom.

While multi-lets may seem more burdensome due to additional requirements from local councils, they often offer higher returns on investment. In fact, many investors have found that the extra effort put into managing multi-lets is well worth it in terms of cash flow and profitability.

Case Study

To illustrate the difference between single-lets and multi-lets, let’s take a look at an example property in Bolton that we found on Rightmove.

Now, keep in mind that this is just a quick comparison and not an in-depth analysis. We haven’t considered maintenance costs or other running expenses. It’s simply meant to give you an idea.

Consider this Property as a Single-Let

If we were to consider this property as a single let, the asking price is £145,000. Based on market rent, we could expect around £650-700 per month. This would give us a potential return on investment of 5.3% to 5.8%.

Consider this Property as a Multi-Let

Now, let’s explore the potential of this property as a multi-let. With some modifications, it could easily be transformed into four lettable bedrooms, and possibly even five with minimal effort.

In our experience with similar properties in Bolton, we’ve achieved around £80 per week per bedroom. Even with four lettable bedrooms, the monthly rent could reach approximately £1,386.

After factoring in an estimated budget of £300-350 per month for bills, the potential monthly rent would still be £1,000 or higher. This translates to a potential return on investment of 8.3% or more, and even higher if you can achieve five bedrooms.

Conclusion

As you can see, the choice between single-lets and multi-lets depends on your criteria and goals as an investor.

Single lets offer simplicity and lower maintenance but often come with lower returns. On the other hand, multi-lets require more effort but can provide higher profitability in terms of cash flow.

Remember to consider various factors such as location, demand, and rental market conditions when making your decision. If you’d like more specific information or have any questions, feel free to reach out to us.