HMO Deal Packs Explained: How to Spot ‘Good’ Numbers vs Marketing Numbers

February 2, 2026

A kitchen in a Property Investment in the North of England

With 34+ years of experience developing HMO properties, then managing them for hands-free investors based all over the world, we have seen just about everything people do to sell an HMO. Some deal packs are built on solid fundamentals. Others are built on optimistic assumptions, selective figures, and marketing-first maths.

This matters because when you buy an HMO, you are not buying a spreadsheet. You are buying an operational business inside a property. If the numbers are dressed up, the reality can hit hard after completion.

This guide explains the most common “marketing numbers,” how to pressure-test them, and what evidence you should request so you can compare opportunities properly.

The biggest red flag: leading with gross income or gross yield

In our opinion, leading with gross yield should be banned. Not because gross income is irrelevant, but because it is not the money that lands in your pocket.

Gross yield is a hypothetical top-line number. It is a “what if” figure that ignores the real costs of running an HMO. It tells you nothing about cashflow.

That is why we always lead with NET yield, not gross yield, because net yield is far closer to what you actually keep after the property operates in the real world.

If a deal pack only shows gross figures, treat it as incomplete.

“Good numbers” vs marketing numbers: what to look for

Below are the most common places where deal pack numbers get stretched, plus the checks that bring them back to reality.

1) Achievable rents vs proven rents

A classic tactic is quoting “achievable” room rates based on best-case comparables, not what the property is likely to achieve consistently.

What to request:

  • A room-by-room rent schedule

  • Evidence of local comparable room lets

  • Current tenancy schedule (if already operating)

  • Letting time assumptions (how quickly rooms fill)

What to watch for:

  • Deal pack assumes every room achieves the highest market rate

  • No allowance for concessions, discounts, or void periods

  • No acknowledgement that some rooms let slower than others

A property can look brilliant at £600 per room on a spreadsheet, then settle at £525 per room in real life once the market speaks. That difference flows straight through to your net income.

2) Voids assumed at “near zero”

Some packs assume full occupancy year-round, or a token 1 percent to 2 percent void allowance. That is rarely realistic unless the location is exceptionally strong and the management is genuinely proactive.

What to request:

  • The void allowance used in calculations

  • The re-letting process and average days-to-let per room

  • Historical occupancy evidence, if available

Reality check:
Even strong HMOs experience tenant turnover. If a pack assumes you never have a room empty, it is not conservative, it is sales-led.

3) Understated operating costs

This is where gross yield becomes misleading. HMOs have more moving parts, and costs show up fast.

Minimum costs that should be modelled:

  • Utilities (gas, electric, water)

  • Council tax (where applicable)

  • Broadband and TV licence (if provided)

  • Cleaning and communal upkeep

  • Maintenance and replacement of furniture, appliances, and wear items

  • Compliance servicing and testing

  • Management fees (and what is actually included)

  • Letting or tenant-find costs

  • Contingency for reactive works

What to request:

  • A full cost breakdown that creates the net figure

  • What is included and excluded in management

  • Evidence the costs are based on actual operating data, not guesswork

If a deal pack shows unusually high net returns, the costs are often the missing piece.

4) “Net yield” that is not really net yield

Be careful. Some packs label a figure as “net,” but it is only net of one or two costs. A true net figure should account for the realistic operating costs that occur every year.

What to ask:

  • “Net of what, exactly?”

  • “Is this net before management, or after management?”

  • “Does this include maintenance and compliance testing?”

If the seller cannot answer clearly, you do not have a net figure.

5) Inflated capital appreciation assumptions

Another common tactic is overstating capital growth using optimistic forecasts rather than evidence.

We prefer to base capital growth expectations on data and what we have physically seen, not aspirational projections. Capital appreciation can happen, but it is not guaranteed, and it should never be used to justify weak cashflow fundamentals.

What to request:

  • Evidence of local sold prices over time

  • A clear rationale for the appreciation assumption

  • Conservative ranges rather than one perfect number

If the growth assumption is doing most of the heavy lifting in the investment case, treat that as a risk signal.

6) Hidden fees, referral fees, and “deal pack” markups

A lot of people spot what could be an HMO, then add a hefty sourcing fee, referral fee, or margin on top. That is one of the easiest ways to make a deal look strong while quietly inflating your entry price.

We are different because we are the direct developers and sellers of the HMOs you see online. Even so, the lesson applies across the whole market:

Always ask what fees come on top of the deal.

What to request:

  • A full schedule of fees, including sourcing, referral, and “project management” fees

  • Confirmation of who is being paid what, and by whom

  • A breakdown of purchase price vs refurb budget vs any intermediary margin

Fees affect your true yield because they change your all-in cost.

7) Management assumptions that do not match reality

A deal pack might assume “fully managed” means everything is covered. In practice, many management offerings are basic, and the extras can erode your net return.

Ask:

  • Is the manager HMO-specialist, or a general letting agent?

  • What is included in management fees?

  • Who handles compliance renewals, inspections, and testing coordination?

  • How are maintenance costs approved and controlled?

  • What is the process to reduce voids?

Management quality is one of the biggest differences between a smooth hands-free investment and a stressful one.

The simplest way to spot marketing numbers

Here is a practical filter you can apply quickly:

If the pack leads with gross yield, shows little detail on costs, assumes near-full occupancy, and bases rent on “achievable” rates with no proof, you are looking at marketing numbers.

If the pack leads with net yield, gives a room-by-room rent schedule, shows realistic voids and costs, discloses fees clearly, and backs assumptions with evidence, you are looking at far more credible numbers.

Why track record matters more than ever

In today’s market, working with developers and managers who have a long, provable track record is one of the clearest ways to reduce risk. Anyone can produce a spreadsheet. The real question is whether they can develop compliant HMOs, operate them successfully, and show evidence of performance over time.

At Foot Forward Properties, our model is built around transparency and due diligence, because it protects the investor and it protects our reputation.

If you want to view our fully managed HMO opportunities, you can see them here:
https://www.footforwardproperties.co.uk/hmo-for-sale/