HMO vs Single Let: Which Is More Profitable?

Two Strategies, One Goal — Profit

Every landlord has asked the same question at some point: “Should I invest in a single let or an HMO?”

Both models can be profitable, but they serve very different investor profiles. The single let offers simplicity and predictability, while the HMO (House in Multiple Occupation) promises higher cash flow — but demands more work and regulation.

At Genius Academy, we help investors compare strategies based not on hype, but on risk-adjusted returns and long-term sustainability.

What’s the Difference Between HMO and Single Let?

Feature	Single Let	HMO (House in Multiple Occupation)
Tenants	One household	3+ unrelated tenants (rooms let individually)
Rent Structure	One monthly rent	Multiple rents per room
Management	Simple	Complex (licensing, compliance)
Cash Flow	Lower but stable	Higher but variable
Regulations	Standard AST	HMO licensing, safety checks
Ideal For	Passive investors	Experienced landlords

Single Let: The Simpler Path

A single let is a property rented to one household (typically a family or couple) under a standard Assured Shorthold Tenancy (AST).

Advantages:

• Easier to manage: fewer tenants, fewer moving parts.

• Lower maintenance: one set of bills, one contract.

• Stable occupancy: Tenants tend to stay longer.

• Straightforward finance: Most lenders accept single lets easily.

Drawbacks:

• Lower yield: One rent source limits income potential.

• Void risk: One vacancy = zero rent.

• The growth in cash flow is slower compared to that of HMOs.

Example: A £250,000 single letting generates £1,100/month rent = £13,200/year. Net yield after costs: ~4.5–5%. Predictable, but steady.

2️⃣ HMO: The High-Yield Strategy

An HMO rents out individual rooms to unrelated tenants, typically young professionals or students, with shared kitchens and bathrooms.

Advantages:

• Higher rental income: 3–5 rooms = multiple rent streams.

• Stronger cash flow: can double or triple monthly profit.

• Risk spread: One empty room doesn’t stop income entirely.

Drawbacks:

• Complex compliance: fire safety, licensing, and planning rules.

• Higher costs: furnishings, cleaning, maintenance.

• Active management: more tenant turnover and admin.

• Specialist finance: Not all lenders accept HMOs.

Example: The same £250,000 property converted into a 4-bed HMO renting at £650/room = £2,600/month (£31,200/year). After costs and management, net yield: 8–10% — but much more hands-on.

3️⃣ Profitability Comparison

Factor	Single Let	HMO
Gross Yield	4–6%	8–12%
Net Yield	3.5–5%	6–10%
Monthly Cash Flow	£200–£400	£700–£1,500
Effort Level	Low	High
Risk	Lower	Higher (licensing, voids, regulation)

The headline yields of HMOs can look appealing — but always compare net profit after management and time involvement.

4️⃣ Which Strategy Suits You?

Choose Single Let if you like:

• Hands-off income and long-term capital growth.

• This strategy provides a straightforward starting point for property investment.

• Low regulation and predictable management.

Choose HMO if you like:

• High monthly income to replace or supplement your salary.

• The portfolio is scalable and boasts strong cash flow.

• A willingness to manage complexity and compliance is essential.

In short: Single, let's build steady wealth. HMOs build income and scale.

5️⃣ Case Study: The Investor’s Dilemma

Sophie buys a 3-bed terrace in Leeds for £220,000.

• As a single let, it rents for £1,000/month → £300 net profit/month.

• Converted to an HMO, it rents for £2,400/month → £1,000 net profit/month.

• But the conversion costs £35,000 and adds management fees of £300/month.

ROI after Year One:

• Single let: ~6%

• HMO: ~10%, but more stress and upfront capital.

It’s not about “better” — it’s about fit.

The Best Investment Is the One You’ll Maintain

Both HMOs and single lets can make you wealthy — but only if you understand the trade-offs. The best choice isn’t always the one with the highest yield — it’s the one that fits your time, temperament, and tolerance for complexity.

At Genius Academy, we help investors match strategy to lifestyle, because financial freedom should simplify life—not complicate it.