First time landlord - Advice :)

tbs624

bitsnbytes wrote: »

.. I also found this site http://www.rla.org.uk/ which seems similar to the previous site. They have mentioned their rates as £75 for the year which is very reasonable The previous site has no mention of prices. I'll give them a call tomorrow in any case. Do you know which one is better?

The RLA (Residential LL Assoc) has around 6,000 members, was the first national LL assoctn and has a solid lobbying background. The http://www.landlords.org.uk/ is an amalgamation of the old Nat Federation of Residential LLs and the National LLs Association and has around 13,000 members (their m'ship fee is 70 quid plus a joining fee - just under 20 quid IIRC -or a discount for 3, 5 yr memberships upwards, with no joining fee.) Agree with Bungarm that joining both is useful, or you could check the local LL association to see which one they are affiliated too: you then get, for example, the RLA magazine plus discounts on LL insurance etc.

bitsnbytes

Thanks again Bungarm, very useful

Bungarm2001 wrote: »

The dodgy financial climate shouldn't actually affect your renting of your property, but more like the long term plans you have and how you are expecting to finance them along with how you will cope if (read 'when') things go pear shaped and you have no financial back up.

For instance, how will you cope if the boiler goes bang in the rental at the same time as your tenant decides to stop paying the rent and trashes the place. Add to that the possibility that you are on sick pay for a while and can't keep up with the mortgage, how will you cope? Do you have at least £5k contingency funding?

TBH, we don't have £5K contingency funding, however, currently I'm relying on my employment and my wife also works from home. I understand what you're saying if I do lose my job, things can go terribly wrong. That's the risk I've taken and I appreciate that in this financial climate I might endup losing a lot if I do lose my job. However, we went into this after calculating that we can support 2 mortgages without relying on the rental income expected from the property (we would need to cut corners of course). We didn't raise the question as to what happens if I lose my job, because TBH if I do I won't be able to support the mortgage on my current house as well. We can rely on parents to bail us for a few months till I hopefully get another job. However, I do understand what you're saying things can go terribly wrong. Fingers crossed, hopefully things should work out.

Bungarm2001 wrote: »

It does in my opinion also depend on how you became interested in setting up a letting business, and how you realistically see the whole market whether todays financial climate will have a long or very short tem affect on you.

Don't take this the wrong way, but were you sucked in by the myriad of property '!!!!!!' shows that endlessly punted out the idea that you couldn't possibly lose if you invested in property this way? Did you go to one of these 'I can make you a property millionnaire overnight' seminars? or like thousands of people decided to 'dabble' after hearing about a mate/work colleague/neighbour who released equity in their home, bought a BTL and were relying on the incoming rent as a future pension? Any of these scenarios are false to one degree or another and there are literally thousands out there who are now suffering badly from the inhevitable turn in the market and the credit crunch.

LOL, we did not get sucked up into anything, however my wife and I were contemplating purchasing another property for over a year now. In fact we did put in an offer on a property last year and the mortgage didn't come through. So we tried again this year. Anyway, the reason we thought of letting was because we do see quite a few properties coming up for rent and going quickly. Also discussing with estate agents and friends who have been living locally here for a while we got the impression that the letting market would be fine.

We never dreamt that venturing into the property business would make us millionares overnight :rolleyes:. In fact we purchased this so we have something to hand over to our children when they grow up and were perfectly ok with not having the rent even cover the mortgage. Definitely did not purchase it with the thought we'd make a profit from the investment. However, we did assume that property development (after watching the property "!!!!!!" shows ) could either get you or lose you a lot of money quickly (possibly a wrong assumption).

Bungarm2001 wrote: »

If you intend to buy more BTL's then you should think long and hard if you intend to get them via mortgaging. Research research and research again. In fact, I would be stunned if you could actually get finance right now for such a venture.

We do harbour the dream of building a property portfolio and this was a first step (besides the house we own). From the thoughts out here, it doesn't seem like a good idea So we will hold that dream and see how this property works out over the next couple of years.
Is there any other option to BTL without mortgaging? I mean we definitey don't have funds to purchase a house/flat outright. Or do you suggest we save up the entire amout and then venture into the letting market? I'd assume that would take us quite a while.

Thanks for bearing with me, this thread has been terribly useful for me so thanks a lot for taking time out to post :T

bitsnbytes

Thanks for that, will definitely look into joining them both. BTW, after the advice from this group and also on landlordzone, we luckily got a recommendation from one of our friends. She is a small time agent and we had a chat with her today and she seemed very knowledgeable. The information she gave lined up with what I've read on this thread and other sites. So we will mostly be going ahead with her She is coming for a viewing this Thursday and her fees are 10% + VAT for full management. She was quite honest with what we could expect for the property. Some agents gave a ridiculously high rental income which we knew could not be possible and we struck them off our list immediately

Also, does anyone have any thoughts on the guaranteed rental income where they pay you a monthly rent (lower than the market value)? I feel the advantage is that we get a guaranteed rent and don't have to bother about tenants, rent recovery etc. However do they do full maintenance? As in if something is wrong with the boiler do we need to sort it out or will they do that? Not sure

Bungarm2001 wrote: »

Join them both. I did a few years ago and never regretted it as Clutton says, the joining fees are fully deductable anyway. The regional meetings are well worth going to. You will learn lots, and hear some real horror stories :eek:

Also recommended are the Landlord Training days that are advertisecd sometimes by both groups. Well worth the money if you need to brush up on Inventories, HSSRS, LL Licesing etc; all things that at the moment I'm guessing you know nothing about, but should make an absolute priority to educate yourself.

beingjdc

bitsnbytes wrote: »

Sorry, perhaps I'm being really dumb but I don't get the point of this post What I don't get is many posters like you don't seem to be interested in posting anything constructive. I've already mentioned that I'm new to this and previous advice (which may be wrong) had convinced me to invest in this property. It might be a mistake, however, I'm not sure in what way your post is supposed to help people like me?
I appreciate you might be one of the more experienced landlords, but you do realise that you might end up asking for advice on subjects you're completely new to. Wonder how you will react to posts like this then :rolleyes:

No I'm not a landlord at all, I'm a tenant. I have only ever owned one property, and I sold it a little while ago. I shall buy another one some time, but not right now.

The point is that £10k is only a serious discount on a flat if it's second hand, the asking price was already low, and it's around the £100k mark. The average selling price at the moment in much of the country is over 10% below asking, so if you got £10k off, say, a £200k flat, you were diddled.

Two bedroom flats are notoriously falling the fastest in price at the moment. That's falling - every month for the last year, and likely to continue every month for the coming year, unless the government do something insane. That's down. They don't always go up. Sometimes they go down. Sometimes a lot, sometimes for a long time.

That's what people mean about the current economic climate. Sure, it also means you're likely to have fewer tenants queueing up as the Poles go home, and that your tenant is more likely to find themselves in rent arrears as their job becomes less secure and their other bills rocket, but more importantly if you have a £200k flat and you rent it out for say £1000 a month (good luck, but let's say), but prices fall 1% a month, you are losing £1000 a month on your investment. Plus fees, repairs, voids, etc.

Good luck, you may be in one of the few areas of the country where this is still a realistic proposition, or you may have a sufficiently large deposit that the maths works for you and all you lose is the opportunity cost of that equity, but I'm not going to sugar the pill and only give 'constructive' advice when I think someone's doing something mad.

Sorry, you clearly aren't on a wind-up, but you managed to say all the things that property bulls say, the things that the people at Inside Track said that caused some people to lose their life savings, and I couldn't believe it was just coincidence. Anyway, enjoy your investment, it'll at least be a learning experience, and if our Government follows the US lead, you might even make a profit.

bitsnbytes

beingjdc wrote: »

The point is that £10k is only a serious discount on a flat if it's second hand, the asking price was already low, and it's around the £100k mark. The average selling price at the moment in much of the country is over 10% below asking, so if you got £10k off, say, a £200k flat, you were diddled.

Well you could have asked that question and I would have told you that it was £10k off £100k

beingjdc wrote: »

Two bedroom flats are notoriously falling the fastest in price at the moment. That's falling - every month for the last year, and likely to continue every month for the coming year, unless the government do something insane. That's down. They don't always go up. Sometimes they go down. Sometimes a lot, sometimes for a long time.

And that's the reason I've mentioned in a previous post that in hindsight I should have gone in for a 2 bed house.

beingjdc wrote: »

That's what people mean about the current economic climate. Sure, it also means you're likely to have fewer tenants queueing up as the Poles go home, and that your tenant is more likely to find themselves in rent arrears as their job becomes less secure and their other bills rocket, but more importantly if you have a £200k flat and you rent it out for say £1000 a month (good luck, but let's say), but prices fall 1% a month, you are losing £1000 a month on your investment. Plus fees, repairs, voids, etc.

Agreed, and again I've mentioned in previous posts that we are looking at the rental income as a bonus. This investment is not about making a profit :rolleyes:

beingjdc wrote: »

Good luck, you may be in one of the few areas of the country where this is still a realistic proposition, or you may have a sufficiently large deposit that the maths works for you and all you lose is the opportunity cost of that equity, but I'm not going to sugar the pill and only give 'constructive' advice when I think someone's doing something mad.

Again as I've said, we've seen properties come up for rent and go pretty quickly. I appreciate the property might depreciate in equity and that's the reason I feel we should have gone in for a 2 bed house instead. Anyway, we are not planning to get rid of the property in the forseeable future, so considering that the property value should rise. I understand it might not be at the rate of inflation etc. However, still above what we paid for (hopefully)
No ones asked you to sugar coat anything. The previous posters I've thanked have given honest feedback and have actually taken time out of their busy schedule to get the facts instead of making ridiculous assumptions. None of them IMO has sugar coated anything. Your post was construcive in no way and I feel was just there to increase your post count

beingjdc

bitsnbytes wrote: »

This investment is not about making a profit :rolleyes:

Then you must surely agree that it is a very curious kind of investment? I have a word for investments that don't make a profit, I call them hobbies

PROFESSIONAL_LANDLORD

bitsnbytes


Consider getting gas maintenance for your property.

Hand over the property in immaculate condition.

Make sure the LA agent does proper checks, (ask to see reports)


You've said your area is strong for rental, LONG TERM you can't lose.

bitsnbytes

beingjdc wrote: »

Then you must surely agree that it is a very curious kind of investment? I have a word for investments that don't make a profit, I call them hobbies

Nope you've got it wrong yet again Not a hobby, it is an investment, it will give me a return when I rent it out. As I said, the property will be of use for my children later by which time it should definitely be worth a lot more than it is now. Till that time if I get rent which covers either part or whole of the mortgage (I'd be surprised if it doesn't cover the whole of the mortgage), I'd effectively be paying around £75- £100 a month for an additional property that will be my own within 25 years :rolleyes:
Basically what I'm trying to say is, by renting it out someone else is paying part or whole of my mortgage for me
Can't make it any clearer than this

bitsnbytes

Thanks for that, excellent tips :T

PROFESSIONAL_LANDLORD wrote: »

Consider getting gas maintenance for your property.

We don't have gas in the property, only electric which is on a prepayment meter currently.

PROFESSIONAL_LANDLORD wrote: »

Hand over the property in immaculate condition.

We did have a professional cleaning service come in and clean the flat. So it is sparkling

PROFESSIONAL_LANDLORD wrote: »

Make sure the LA agent does proper checks, (ask to see reports)

Can you please let me know which report I should be asking for?
We were quite impressed with a local LA (who came recommended highly by another landlord) after advice on this thread. The corporate ones we found lie a lot as mentioned again by other experienced landlords. She did say she would do an inventory check

karenj

I'm a landlord and let the property through an ARLA registered agent. I have rented property for the last 8 years. I took out 'rental protection insurance' through the agent, but any tenant who has CCJs against them, the insurer will not cover.

I had a situation last year where the tenant was in arrears with rent and there was nothing the agent could do as we did not have the rental protection insurance (as it did not apply as the tenant had CCJs). However, as I had taken out landlords insurance, this DID cover me for non payment, issuing court orders and legal fees. So, if you have landlords insurance, check that it covers for this. I was so annoyed that all these years I was paying for the insurance through the agent when all along I would have been covered under the landlords insurance policy.

Also, I found that a tenant had been found for the property, but it was only AFTER they had signed and moved in that I wasn't eligible to take the rental protection insurance as the tenant had previous CCJs.

How bad is that? This should be checked BEFORE a tenant takes possession.