So, you're thinking of selling your HMO?

There are a few things to think about to get the right sale for you and your property: value, who's buying and who can actually perform, the health of the HMO, and how much marketing to do.

Value

Most landlords want to explore a yield value: a price based on the rental income, not the bricks and mortar.

Start with the expected gross yield for your area. What have similar HMOs sold for locally, and at what gross yield? That's the first broad brush. Yields vary from city to town and south to north, from as low as 6% to as high as 16%, and every area has its own pinch point.

Value goes far beyond the gross yield, though. Condition, occupancy, the likelihood of lending, size, tenant type, net costs and location all count. Some HMOs have to sell at bricks-and-mortar value because they simply won't get over the line at the higher yield value.

Who's buying, and who can perform?

Value an HMO on its income and punt it around a few Facebook groups and your inbox will be full within minutes. That's often a false economy. Most buyers starting out with their first HMO will walk straight into a down-valuation, and the sale falls through.

The key is knowing who to sell to and who can perform. Sell to the wrong buyer and they'll either chip you for a discount or won't be able to complete at all. The right buyer is happy to pay the best price because the HMO fits their exact brief.

The health of the HMO

Agreeing a sale from a brochure, a couple of viewings and some figures is fine, but to get through due diligence and legals the HMO has to be healthy. The buyer needs the facts: occupancy history, past hiccups, current tenant issues. The real reason a landlord is selling always comes out in the end, so manage it.

Health also means compliance, the right tenancy agreements, deposit certificates and a clean title. Anything missing slows a sale down or kills it. If you're selling on income, make sure you're 100% occupied the day the valuer visits.

How much marketing?

Selling a family home is all about maximum exposure. Only some HMOs do well that way. Knowing whether yours needs a quiet approach or full marketing is the trick to getting the most for it.

From experience, it's about 50/50 whether the best price comes off-market or on, and sometimes a combination works best. Buyers hunting "off-market deals" usually want to pay less, while buyers on the portals tend to be happy at market value. Larger corporate and high-net-worth buyers often need off-market conditions, so listing the wrong HMO on Rightmove at the wrong time can hurt your exit.

Knowledge is key from the outset.

First posted on my Facebook page. Lightly edited.