CMO property, aka Commercial Multiple Occupancy is a fantastic way of scaling your property business. Most people have heard of HMO residential property investment which is a tried and tested investment strategy, but fewer investors have tried CMO’s. It is a strategy that can quickly produce life changing results and it has been our main focus for quite some time.
A bit like the game of monopoly we wanted to trade in some houses for a “hotel”
After a few years in residential investment we were getting frustrated and wanted to find some bigger deals where we could find scale and opportunity. A bit like the game of monopoly we wanted to trade in some houses for a “hotel”.
What are CMO Buildings.
Commercial Multiple Occupancy investments are single buildings where several different companies rent separate workspace to carry out their various business activities. The services and building management are generally shared proportionally between the occupants. They will all have their own commercial lease or license to occupy with the owner or operator.
Commercial multiple occupancy can take the form of office buildings, shopping centres, industrial complexes, or full multiuse properties. We have a broad mix of space types in our CMO buildings including private offices, storage, industrial space, food and beverage space, venue space, meeting space, coworking, business lounges and health & beauty studios. Some are rented out by the hour, some for years at a time.
There are a number of exciting reasons to seriously consider CMO:
- Commercial Buildings of multiple occupancy give you a chance to scale up quickly. For our first deal we swapped in 3 residential properties for one CMO property with over 30 different customers. That building now has over 35 units and produces over £150K turnover per year.
- One building could give you financial freedom. Depending on your current income level it is possible to replace your income with just one deal. You might have to trade in a couple of residential investments to make it happen, but the opportunity cost could be very persuasive.
- Your resources are concentrated in just a few locations. Rather than being spread over a number of properties your can be much more efficient by focusing on one location with multiple “tenants”.
- You can really affect the building value which can then be leveraged for future purchases. This is a huge advantage and deserves a whole blog all of its own. Suffice to say you can scale quickly.
- There are multiple streams of income and not just rental income. Some of our locations have over 10 different forms of income streams.
- Annual turnover from just one location can be six figures. Currently, our smallest location has a turnover in excess of £100,000 per year. The equivalent in Residential properties could involve quite a number of separate investments.
- Purchase prices can be much lower than you expect. It is a business model that can work well with challenging properties that some traditional landlords or businesses don’t quite know what to do with.
- Income can rise quickly due to shorter licenses. Customers come and go with shorter license periods which gives you the opportunity to upgrade spaces to suit the market and increase income as you go along.
- There are some considerable tax benefits over HMO investment. Investing in commercial property and potentially a trading business can really help you access more tax saving strategies.
- Business start-up levels and storage use is continuing to increase. These two trends have helped CMO demand grow consistently for a number of years.
The little known strategy of CMO has been life changing for us and I would highly recommend it to investors who want to get involved in growing the value of their portfolio. Residential investment can be a little bit repetitive whereas CMO developments are always different and can really give you the chance to directly increase your portfolio income and value.
