HMO is certainly good on paper, but isn't there a very high turnover of tenants? Also, it is harder to get your rent from them because usually they are from a lower social economic class, generally speaking.
Yes there is a perceived higher turnover but in reality in a 10 bed HMO (the way we develop them I.e. Very high spec) the turn over is the same as 10 single let studios... It's just the increased volume of tenants but if you had more single let properties you have the same!
In this example (and most HMOs) you only need around 60% occupancy (property dependant) to cover your costs so I actually see a well managed HMO portfolio far less risky than a traditional BTL model... 40% voids an your mortgage is still easily covered!
We also make MORE money when we have tenant turn over and play this to our advantage. We charge a small check out fee (some charge a check in fee) and this covers any losses for turnover and in an area of high demand you'll make an even higher yeild (not less).
The market has changed for a lot of Uk landlords... HMOs are not the grotty, horrible house shares they used to be associated with and are now turning into high end (almost corporate) style, professional house shares, more akin to studio living but still with the shared kitchen amenities etc.
We rent only to professionals and have very few rent collection problems. Being quick to follow up late payers, taking guarantors where possible and 6 weeks deposit helps us reduce any defaulting tenant risks...