bi22le
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| posted on 19/1/15 at 09:27 PM |
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Buy to let experience
In the next 12 months there may be an opportunity to buy the house off of my in laws. They have it as a buy to let and we will be looking at doing the
same. They want to cash out and spend the accumilated money.
We are looking at it long term. To add to our pension portfolio. We expect the rent = mortgage and therefore only earn on the equity \ capital.
Obviously we have a pool of info with the inlaws but also know that LCB members have a word to say about anything!
I dont really have particular questions so am just interested to hear what people say.
[Edited on 19/1/15 by bi22le]
Track days ARE the best thing since sliced bread, until I get a supercharger that is!
Please read my ring story:
http://www.locostbuilders.co.uk/forum/13/viewthread.php?tid=139152&page=1
Me doing a sub 56sec lap around Brands Indy. I need a geo set up! http://www.youtube.com/watch?v=EHksfvIGB3I
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joneh
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| posted on 19/1/15 at 09:39 PM |
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This sounds harsh but don't have a DSS tenant.
My friend rents one out to a DSS tenant, she's 2k in arrears and has wrecked the place. Our neighbour tried renting their house, their DSS
tenant paid no rent and it took three months to evict.
Of course I expect most DSS tenants are fine.
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kingster996
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| posted on 19/1/15 at 09:44 PM |
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Sad to say my only experience as a landlord was as above. Tennant (dss) redecorated in bright blue and fell behind with rent. I was too soft.
However my brother lets his via agency to professionals only. Never any bother.
I used to be indecisive, but now I'm not so sure
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cliftyhanger
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| posted on 19/1/15 at 10:07 PM |
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Treat it as a long term investment, if it is a new thing to you use a decent agent.
Do not get attached to the house, it is there as an investment, not to be your home. Don't get upset when people do not look after it as you
would hope.
On the plus side, the whole income thing works out very nicely over the long term. ie the first investment house we bought nearly 20 years ago cost us
60K plus about 5k spent (heating and rewire, a kitchen etc but stuff was cheaper back then) Today it rents for about 25k pa. OK, it has had a couple
of kitchens, several coats of paint etc, but it is currently worth about 400k. If we sell it we would clear about £180k profit after tax.
Not bad on something that has paid for itself.
BTL are a self funding pension. Keep it 15 years, take no profit and it will be paid for outright, easily. Then you have a nice asset, but more
importantly an excellent income for life........
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perksy
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| posted on 19/1/15 at 10:19 PM |
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Several friends have properties and all same the same thing, If you have decent tenants then its fine.
One lad had a bloke that fell behind with his rent, trashed the place and disappeared. It needed a new kitchen etc.
But on the whole they give favourable reports from both an income and investment basis...
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bi22le
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| posted on 19/1/15 at 10:28 PM |
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Sounds good so far.
It's in Bath but that does not stop bad tenants trashing it.
The inlaws use an agency as will we. The one they use seems to provide good tenants, no students and get good prices for work required.
Track days ARE the best thing since sliced bread, until I get a supercharger that is!
Please read my ring story:
http://www.locostbuilders.co.uk/forum/13/viewthread.php?tid=139152&page=1
Me doing a sub 56sec lap around Brands Indy. I need a geo set up! http://www.youtube.com/watch?v=EHksfvIGB3I
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theduck
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| posted on 19/1/15 at 10:33 PM |
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Sounds like it is currently managed with a good agent, stick with them!
I was 10 years in lettings and now train estate agents for a living. BTL is great, but you must go into it expecting and budgeting for the worst.
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Barkalarr
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| posted on 19/1/15 at 10:41 PM |
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We've got a little 2 bed place which we rent out. We don't use an agency because it's just around the corner (walking distance).
We use the local Facebook page to rent it and last time we looked for a tennant, we had 8 people chomping at the bit to rent it. SWMBO's mate
is a property layer and she does the contracts.
I will say - if you get a good tennant, make sure you look after them and they should look after your house - convince them it's their home.
We put together an idiots guide booklet with the location of the stop cock, gas main etc, which answers some dumb questions.
We also have the British Gas cover at £30 / month which enables out tennant to call them up for electric fault, boiler faults radiators etc.
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loggyboy
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| posted on 19/1/15 at 10:53 PM |
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quote:
Originally posted by bi22le
Sounds good so far.
It's in Bath but that does not stop bad tenants trashing it.
Sell it a buy something local?
Mistral Motorsport
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mk85
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| posted on 20/1/15 at 03:15 AM |
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I purchased my first flat when i was 20 and decided to rent it. I was asked if I would rent it to a friends friend as they wanted somewhere ASAP. He
worked for northern rock and his Girlfriend was a mother with no job. First month was fine second month he left her and she asked to stay on go on
dss. I didn't see it being a problem and helped her fill the forms out ran her round to do it all. Long story short she was in there for 1 year
not paying a penny. She got free legal aid and even got a restraining order against me from contacting her or her ex partner who I found out they
never actually split he just wanted to get of the tenancy agreement.
The recession hit the 2nd month they where in and I was layer if work. Savings went then my cars where sold and then I had nothing. They finally left
after 13 months only because they had the gas and electricity cut off. Once I got the keys back they trashed the place. They even pulled all the
flooring up. Took the coals out of the gas fire and stamped on them.
I ended up having the placed respossed then ended up going bankrupt for just under 100k
But am not put of am looking to buy again in the next year once I sell my current property.
[Edited on 20/1/15 by mk85]
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theduck
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| posted on 20/1/15 at 08:13 AM |
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Mk85, as soon as she was 2 months behind a section 8 notice under grounds 8, 10 and 11 would have allowed you to evict. No need to let it drag on and
these types.of tenants are simply hoping you will be "too nice" to evict immediately.
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Irony
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| posted on 20/1/15 at 08:19 AM |
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quote:
Originally posted by theduck
Mk85, as soon as she was 2 months behind a section 8 notice under grounds 8, 10 and 11 would have allowed you to evict. No need to let it drag on and
these types.of tenants are simply hoping you will be "too nice" to evict immediately.
Agree - The property is a business. Business is business.
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mk85
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| posted on 20/1/15 at 08:22 AM |
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I was to nice they all ways had a story. I got a solicitor onto in hence the bloody debt. I learnt the hard way but I hear that the couple do the same
time and time again
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russbost
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| posted on 20/1/15 at 08:34 AM |
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I think the story above tells it about as bad as it can get. Most important thing is to ensure that whoever gets you the tenant has them properly
vetted. The agency we use charges prospective tenants around £40 for a vetting procedure which checks that they are who they say they are, are
entitled to rent in UK (that's a new one just come in), don't have court orders etc. & have decent references, usually from previous
landlords, letters from friends, relatives etc are NOT accepted as a reference. It SHOULD, if all paperwork is in order & has been properly
lodged, not take more than around 5 months to get someone out who's not paying, but don't expect judges to be sympathetic & if Xmas
gets in the way add at least a month to that!
Never, let to "friends" or friends of friends without first having them properly vetted thro' credit checks etc., never let to
anyone (even close family) without a proper tenancy agreement in place, it's illegal & can cost you at least 3 months rent, I rent a house
to my son & his girlfriend (at a heavily discounted rate!), but they still have a normal tenancy agreement in place. Always take a deposit, it is
becoming more common now to ask for 1 & 1/2 months up front rather than the traditional 1 month.
We have let to both private & DSS, probably the best tenant I ever had was DSS & the worst 3 I've had have all been private &
employed - at least at the start of the tenancy, we've had good & bad from both sides. I cannot emphasize how important it is to use an
agent that vets people properly & does the right credit checks etc., we only have them find the tenant for us, we do our own management which
reduces ongoing costs, none of the 3 bad tenants I've had (this is in over 20 years of letting property) were thro' the agency we now use
- it's a good idea to join a landlords group, we are members of Eastern Landlords, & go along to a few local meetings, meet & talk to
other landlords, find out what agents they use & pick up info & tips. Eastern landlords cost us around £70pa, but we save more than that
thro' an insurance scheme available only thro' them. Worst tenant we currently have is about 1 & 1/2 months behind with her rent, but
that has been due to specific circumstances & she is now slowly catching up, we find about 50% finish up getting at least slightly behind at some
point, but we aim at keeping people happy, setting rent fairly, (not trying to screw the last fiver out of it), working with the tenant rather than
creating a war & looking at things long term, nearly all of our tenants stay with us for several years - downtime & voids are to be avoided if
at all possible.
Good luck with your venture, I doubt you'll regret it - best thing I've ever done! 
I no longer run Furore Products or Furore Cars Ltd, but would still highly recommend them for Acewell dashes, projector headlights, dominator
headlights, indicators, mirrors etc, best prices in the UK! Take a look at http://www.furoreproducts.co.uk/ or find more parts on Ebay, user names
furoreltd & furoreproducts, discounts available for LCB users.
Don't forget Stainless Steel Braided brake hoses, made to your exact requirements in any of around 16 colours.
http://shop.ebay.co.uk/furoreproducts/m.html?_dmd=1&_ipg=50&_sop=12&_rdc=1
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NOTE:This user is registered as a LocostBuilders trader and may offer commercial services to other users
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Irony
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| posted on 20/1/15 at 08:38 AM |
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I have a second property that is on a interest only mortgage. I took some bad bad financial advice on buying the property and went interest only (I
was young and naive). About 18 months ago my partners father died unexpectedly and we got 27K. We bought a new house and we have been renting my old
house. I is in mint condition because I have renovated myself and it has new everything. The first person who viewed it rented it. They cheated me
slightly by not telling me the girl was pregnant and she gave up work. I would suspect they are struggling to pay the rent on one income but they pay
it.
My advice is this:
1. Get a professional estate agent to advertise and vet the potential renters.
2. Insist on doing the viewings yourself so you can vet them!
3. Work with your tenant to sort problems but stick to the tenancy agreement - I bend slightly in the tenants favour.
4. Don't take any crap from the tenant - If they fall behind with the rent they are gone!
For the first 8 months my tenants tried to get me to do all sorts of stuff that I have refused to do. These include, changing lightbulbs (I kid you
not), unblocking the toilet, putting up curtains, mowing the lawn, getting damp specialists in (they were drying baby cloths all over the house and
were wondering why the windows were wet), getting the house fumigated against fleas (6months after they moved in).
On the whole the renting thing has gone very well and as I don't have a pension I am putting everything I can to get the mortgage paid off.
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mark chandler
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| posted on 20/1/15 at 09:16 AM |
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My experience was bad because I could not afford the down time.
Flat entered negative equity so got a huge mortgage and purchased another property and let my flat out which covered the mortgage on it, any problems
and I struggled badly so once it could cover itself sold it.
Worst tenants I had, grammar school teachers.... Go figure.
So if you can afford 3 months empty per year you should be fine.
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JoelP
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| posted on 20/1/15 at 09:45 AM |
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I've had a couple of hovels, and a fair selection of shite tenants to be honest. In the long run it works out well, so long as you can afford to
get through the hiccups.
I'm in the process of offloading the hovels to try to get decent houses closer to home.
Beware! Bourettes is binfectious.
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Alfa145
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| posted on 20/1/15 at 11:08 AM |
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Make sure you can still afford the mortgage and the council tax/bills for the property if it's empty for a couple of months.
If you have a good management company already then keep them, saving a couple of % is not worthwhile if you end up with a shite management company
Local is better. I bought one 40mins drive away. Pain in the arse sorting it out between tenants, but my property 5 mins away is simple, plus you can
drive past easier to see if they're looking after the basics outside.
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geoff shep
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| posted on 20/1/15 at 11:45 AM |
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BTL mortgages require higher deposits and charge higher rates. If your folks are currently benefitting from a low rate, or it is on a residential
mortgage, you could find a new mortgage will be more expensive. If rent only equals mortgage, you will be out of pocket for all the other expenses -
landlords' safety checks, repairs, outgoings when empty etc. Bear in mind that mortgage rates are at an all time low and can only go up.
Non-payers can be difficult to evict, even with all the correct section whatever notices and an agent and a solicitor. I have had 2 non-paying
tenants despite all the vetting and guarantors and now always have insurance to cover loss of rent and legal fees - good value at only £160 per year.
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mookaloid
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| posted on 20/1/15 at 01:45 PM |
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As Mr Duck says above. Use a proper letting agent.
Feel free to U2U me if you need any advice in the future. I have run my own Letting Agency for 11 years now.
Cheers
Mooky
"That thing you're thinking - it wont be that."
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bi22le
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| posted on 20/1/15 at 08:40 PM |
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Thanks for all of the advice.
Once the time actually comes we can start sitting down and doing figures. If we have to put a little in to make it viable we may still go for it as
the oppotunity is fair and wont come much cheaper than this (family rates).
I really wish it was more local but the house was purchased 13 years ago when my wife went to uni @ Bath. They come into some inheritence money and
investied it in that to trade off against my wifes living costs and allow her to chose her house mates.
We cant move it closer as the equivalent of a house in my area would be double the cost, infact I dont think I could buy a flat near me for the price
of a 3 bed house in that area.
We will certainly try and stick with their agent and hopefully the same tennant.
The figures will be tight, no doubt, but hopefully with a bid deposit and a long term (not interest only) we will get the deal done.
Ill keep y'all posted either way.
Track days ARE the best thing since sliced bread, until I get a supercharger that is!
Please read my ring story:
http://www.locostbuilders.co.uk/forum/13/viewthread.php?tid=139152&page=1
Me doing a sub 56sec lap around Brands Indy. I need a geo set up! http://www.youtube.com/watch?v=EHksfvIGB3I
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cliftyhanger
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| posted on 20/1/15 at 08:57 PM |
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I wouldn't be afraid of students.
We recently bought a place that was already let via a university scheme. The uni rented the house, and then put students in it. Yes, they were a bit
fussy in their requirements, but nothing outrageous. And the rent was a little below what we now get. But rent is guaranteed, and damages etc are paid
by the uni and they get it back off the students.
Just a hassle free way of renting, which returns a little less.
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loggyboy
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| posted on 20/1/15 at 09:04 PM |
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quote:
Originally posted by bi22le
We cant move it closer as the equivalent of a house in my area would be double the cost, infact I dont think I could buy a flat near me for the price
of a 3 bed house in that area.
What sort of value does the house have?
I wouldnt expect it matters what size you consider to replace, as generally the rental figures are equivelant, as they will be based on value not
size. So unless you have ties/reasons to visit that area, if it was me, I would be selling up and finding something closer, not necesarilly your town
(I appreciate youre london premium) but there are plenty of commuter towns near by that would have plenty of housing stock, you could also look at
getting 2 smaller properties with better yeilds than one larger one. Find the right area of the right town and you can up the likelyhood of quality
tenants. Single/coupled profesionals will always look after a place better than a family. So a 1bed apartment/house in a nice area should raise your
tennant profile.
Mistral Motorsport
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mk85
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| posted on 20/1/15 at 11:06 PM |
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Here's a few pics I've dug out of my photos. This was the second bedroom that had a fresh laminate floor freshly painted with new
furniture. When u got the keys back It was bare no furniture no flooring lights anything. They had been using it to put there rubbish instead of
putting in the communal bins.
[Edited on 20/1/15 by mk85]
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cliftyhanger
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| posted on 21/1/15 at 08:15 AM |
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Yep, that happens from time to time, but well vetted tenants, guarantors etc usually mean that is rarely a major issue. The killer is dead time when
the place is empty (which a bad tenant effectively causes)
As to buying/selling, remember selling a BTL means you pay CGT on all the increase in value, less any capital expendature. That means you cannot
"roll over" the money to teh next place. To me that is a huge hurdle. I can't afford to sell any of my places as I would lose a vast
amount of the capital. And that capital is what means a "better" house with more income. Yes, one day I will have to pay the CGT, but I am
way better off delaying that time as long as possible and enjoying the income. After all, I see the BTL as income, and largely ignore the capital
growth.
My parents are getting old and frail, but own (and have for 50+ years) some letting property. As far as we can make out, if they sell, they will pay
40% of the value straight to the govt. And then when they die, 40% of what is left will be nabbed as inheritance tax. ie they get to keep 36%. I need
to check this, but they believe if they keep the houses, us kids will have to pay the IHT, but will inherit free of any CGT.
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