Buy an HMO with none of your money

Buy an HMO with none of your money

How to invest in an HMO with no money down

As we highlighted in a recent blog, “no money down” property investment doesn’t exist. That said, there are ways you can still invest in property with none of your own money.

In our experience, HMOs have a better ROI than a single buy to let – and you can take advantage of the higher ROI without using your own money.

What is an HMO?

HMO stands for house in multiple occupation, and it is a single house that has been converted for use by multiple people. The government website explains that a property is an HMO if both of the following apply:

  • at least three tenants live there, forming more than one household
  • you share toilet, bathroom or kitchen facilities with other tenants.


On this basis, your house has more than one tenant paying rent – meaning you’ll have multiple rental income streams.

Typically, an HMO should make you between £500-£1000 a month. So, you will only need three or four HMOs to replace your normal monthly income.

Here’s how to buy 3-4 of these cash cows with none of your own money.

Raising a deposit and monies to create an HMO

You will need a deposit to buy HMO – this will typically be in the £50,000 mark. Plus, you’ll need to allow a budget for creating the HMO (such as fire doors, fire alarms, furniture because most of these will be serviced and furnished accommodation, and so on.)

And you’ll need to pay all the related bills (HMO insurance, maintenance etc.)

Here are several options to help you fund the deposit, and refurbishment budgets for your HMO that you can use in combination – or just pick one option and run with it.

  1. Investor fixed return loans

Investor fixed return loans do exactly what it says on the tin – you can borrow from friends, family or actual investors. That said, it is essential to completely understand what you’re doing. Make sure that you have the right paperwork in place. Get the proper training.

  1. Joint ventures (JVs)

You can joint venture with somebody who wants to get into property, but who doesn’t have the time, skills or the know-how to run an HMO.

These are typically successful people in other areas who have money they want to invest in property but don’t want to get their hands dirty. So, you can joint venture with them to fund your deposit and refurbishment budgets.

  1. Buy a house and turn it into an HMO

This one is slightly different from the others. You buy a house and turn that into an HMO. We suggest you buy the worst house on the best street.  The refurbish it, restore it and then refinance it.

Operate the HMO, and just keep recycling the cash to get to your three or four HMO properties.

  1. Lease options

A lease option is an agreement that gives a renter the choice to purchase the rented property during or at the end of the rental period. In this case, YOU are the renter. But you are sub-letting the property to tenants.

You want to negotiate a lease option that has a low-value input from you. Give the owner enough rent so that you make a profit from multi-letting.

You then put that money aside, save it up and use it as a deposit in five years’ to buy.

Or, you can negotiate that your monthly rent comes off the asking price while building up equity in the deal as you go.  You can then buy it. And, if the property has gone up in value, you can refinance, then the whole things snowballs.


So, there you have it, four options to creatively buy HMOs or take ownership of HMOs without putting in any of your money. Whatever you do, make sure that you are fully conversant in the legal requirements of running an HMO, and also ensure you understand the different contracts and agreements that you need to have in place, so everybody is protected in this venture.

Want to learn about investing in Property / HMOs?

‘House Arrest’ is a practical guide to replace your income through property, written by Rick Gannon. You can get the book for free HERE


Join us on one of our courses or phone the office on 01684 368468 to find out if property is for you.