If you're thinking about investing in property, one of the first questions you're likely to ask is: which property investment strategy is best?
Buy-to-let? An HMO? Serviced accommodation?
I’m asked this regularly, and my answer is always the same.
It depends.
I've invested across all three strategies during more than 30 years in property. Each can work extremely well when the property, location and investor are right. Each can also become an expensive mistake when they're not.
The question isn't simply which strategy generates the highest return.
It's what do you want your property investment to achieve?
Buy-to-let, HMO or serviced accommodation: what's the difference?
Before comparing them, it's worth understanding the basic models.
A traditional buy-to-let generally involves purchasing a residential property and letting it to an individual, couple or family on a longer-term basis.
An HMO, or House in Multiple Occupation, is occupied by people from more than one household who share facilities such as a kitchen or bathroom. HMOs can have additional licensing and management requirements. In England, a large HMO with five or more occupants forming more than one household requires a licence, and local councils can extend licensing requirements to other HMOs.
Serviced accommodation typically involves providing furnished accommodation for shorter stays, which could include holidaymakers, business travellers and other short-term guests.
All three can generate returns. But they require different levels of capital, time, management and expertise.
Is buy-to-let still a good property investment?
Buy-to-let was where my own property journey began.
I bought relatively inexpensive properties in good areas, refurbished them and refinanced them.
I still own a significant number of buy-to-let properties in working communities across Yorkshire. They work because they're in areas with strong rental demand, they're relatively inexpensive to maintain and they provide consistent rental income.
For me, that's one of the biggest attractions of a well-chosen buy-to-let.
It may not produce the headline income figures people associate with some other strategies, but the right property can be a long-term asset with the potential to provide both income and capital appreciation.
The emphasis, however, is on the right property.
Location, purchase price, local demand, condition, finance and ongoing costs all matter.
Are HMOs more profitable than buy-to-let?
HMOs often attract investors because of their income potential.
Rather than receiving one rent for the whole property, you're typically generating income from multiple occupants.
I've developed and managed HMOs across Yorkshire, particularly in cities and towns close to amenities and good transport links.
When they're done well and in the right location, they can create substantial income streams.
But higher potential income doesn't automatically make an HMO the better investment.
HMOs can be difficult to source, expensive to develop and considerably more involved to manage. There are also additional regulatory considerations. Depending on the size and location, licensing may be required, alongside specific property and safety standards.
This is why I wouldn't choose an HMO simply because a spreadsheet shows a higher potential yield.
You have to consider what you're actually trying to achieve and how much involvement you're prepared to take on.
Is serviced accommodation a good investment?
Serviced accommodation can also offer strong income potential, but location is absolutely critical.
I have experience with serviced accommodation and holiday properties in locations including Cornwall and the Lake District, where there is established visitor demand.
Get the property and location right and the model can work extremely well.
But it isn't passive.
Bookings, cleaning, maintenance, guest communication and occupancy all need managing. Finance can also be more complex, and anyone considering short-term accommodation needs to understand the rules applying to the particular property and area.
For self-catering holiday accommodation in England, current government guidance advises owners to check with the relevant local authority about planning and local requirements, alongside obligations covering areas such as fire, gas and electrical safety and appropriate insurance.
The tax position has also changed. The separate Furnished Holiday Lettings tax regime was abolished from April 2025, so investors shouldn't base a current strategy on tax advantages that previously applied to qualifying holiday lets.
Again, it's about understanding the complete investment, not being attracted by the potential nightly rate.
Buy-to-let vs HMO vs serviced accommodation: the pros and cons
There isn't a simple winner.
Buy-to-let
Typically more straightforward to understand and manage, with the potential for consistent long-term income and capital growth. However, yields may be lower than more intensive strategies.
HMO
Potential for higher income from a single property, but sourcing, development, regulation and management can be more demanding.
Serviced accommodation
Can generate attractive returns in areas with strong demand, but tends to require more active management and income can be affected by occupancy and seasonality.
The numbers matter, but they aren't the only consideration.
Your time matters too.
Don't choose the strategy before you choose the property
One of the most common mistakes I see is someone deciding:
"I'm going to invest in HMOs."
They then start looking for a property they can turn into an HMO.
That's backwards.
I've seen people try to force a particular strategy onto the wrong property, in the wrong location, simply because they've already decided that's what they want to do.
The property has to work.
The location has to work.
The demand has to exist.
And the strategy has to support what you're trying to achieve.
Sometimes the best opportunity for you might be a straightforward buy-to-let. Sometimes it could be an HMO. Sometimes serviced accommodation makes sense.
You shouldn't need to force the numbers to justify the strategy.
What I would do differently if I started investing again
When I started buying property, I learnt largely through trial and error.
In the early days, I even spent my own time refurbishing buy-to-let properties.
If I were starting again, I wouldn't do that.
I'd spend more of my time finding opportunities, analysing deals and building the portfolio, and bring in the right people to carry out work that didn't require me personally.
I also invested overseas, including in France, Bulgaria and Dubai, with mixed results.
Most of my decisions worked. Some didn't, and I lost money along the way.
If I could change one thing, it would be to get properly educated before investing significant amounts of money rather than gaining all of that knowledge through experience.
Those successes and mistakes are a large part of the experience I now draw on when mentoring other investors.
So, which property investment strategy is right for you?
The answer starts with your goals.
Do you want income now?
Are you primarily interested in long-term capital appreciation?
How much capital do you have available?
How much time can you realistically commit?
How involved do you want to be?
Where do you want your portfolio to take you in five, ten or twenty years?
Only once those questions are answered does it make sense to start discussing individual strategies and properties.
The aim isn't to build a portfolio that looks impressive on paper.
It's to build the right portfolio for the life and future you want.
Start with a free Position Audit
If you're considering buy-to-let, HMOs, serviced accommodation or another property strategy but aren't sure which direction is right for you, start with a Position Audit.
It's a free 30-minute Zoom with me where we'll look at your current position, your goals and what you're trying to achieve through property.
I'll ask a few straightforward questions and aim to give you at least one observation about your position that you haven't heard before.
There's no pitch, no slide deck and no upsell on the call. If it makes sense to explore a next step afterwards, we'll talk about that by email.
