A dilemma - what would you do???

franklee

Unless you can go for barnaby-bear's suggestions of renting to the council or housing associations I don't think you can afford to do it.

The figures for doing it through the EA as you propose: Rent income, 900pcm, less say 12% agent's fee for full management, less a few hundred admin and inventory fees etc. per year, less your rent of 660pcm.

That leaves you with about 100pcm to pay for the insurances for the British Gas central heating etc., buildings insurance, landlord's insurance and to cover all repairs and maintanance. Plus you will have to pay the mortgage for empty periods, council tax (there is some exemption) and utility bills when the property is empty. Then there are solicitors fees and court fees should you need to enforce anything against the tenant through the courts e.g. evict a non-paying tenant.

Also you should inform your lender and they may want to make a charge and will need to give consent to let. They may want a certain rent to be obtainable.

As already pointed out as you live in a bad area it's unlikely you will be able to attract good tenants or if you do attract them you may not keep them for long. So private letting as you propose, chances are you will end up with bad tenants. Given you can only cover the mortgage and rent for one month you will be looking at getting repossessed pretty quickly should you get a bad paying tenant. Bear in mind that with the recession tenants are losing their jobs just like anyone else.

franklee

truman_sparks wrote: »

as most above, I would go for it.

Once you know your "in" I would try to sell up. I dont see the point in keeping a depreciating asset. With all the aggrivation of tennant's etc and prices coming down, you would be ahead of the game in 18 months even if you take a hit now to get out. you could even buy back to the same area if it goes wrong,

all bases covered.

gl
TS

As the Op can only cover the mortgage and rent for one month I do not think she can afford to move and keep the property empty long enough to secure a sale. Better would be to remain living in the house until it's sold. I agree with the sell part, even if taking a hit on the price.

truman_sparks

franklee wrote: »

As the Op can only cover the mortgage and rent for one month I do not think she can afford to move and keep the property empty long enough to secure a sale. Better would be to remain living in the house until it's sold. I agree with the sell part, even if taking a hit on the price.

Agree, i mean the "in" as regards the school situation. I would maybe get an auctioneers opinion, fast sale, no messing. with prices dropping may not be a loss at all in time. If the op can live with the estimated figures then go for it.

Holding on to the property to de value, possibly get wrecked or end up with no tennents doesnt seem too appealing to me. atleast with selling, you know where you stand.

but op should go for it imo.
"The biggest regrets in life are things we dont do, not the things we do".

davsidipp

deffo go for it i live not far from orpington so know area well you cannot afford to mess childrens education up and if it means downgrading to a smaller house its worth it.speaking from my point both my kids who are adults now went to good schools in surrounding area so i know how important education is.living in asmaller property can have its benefits smaller bills and less work to decorate so go for it.

Smashing

Another factor to consider is that even if you find a tenant, if the area is as bad as you say, they may not stay that long, leaving you with vacant periods during which you'll still have to cover both rent and mortgage so getting a tenant within a month isn't necessarily the full gone conclusion.

Would you be prepared to take a hit and go for a quick sale at a bargain price or by auction?

JayZed

kazmc, you say that your mortgage is £700/month. Is that interest-only, or repayment? If your mortgage interest is £700/month, then as a rough rule of thumb I'd say you need to achieve rent of at least £900/month, and preferably £950/month, to ensure that you can cover mortgage repayments and have enough in the kitty for emergencies/empty periods - especially if you're paying £100 a month or so to a letting agent.

Also, do you have consent to let from your mortgage lender? If you're using a letting agent they will probably want to see confirmation of consent to let. In theory you are required to inform your lender; in practice not everyone does it, which is normally not a problem as long as you keep up with the mortgage payments but could become an issue if you have problems with the payments.

It is essential to inform the insurer who provides your buildings insurance that you will be letting the place, and you will probably have to pay a somewhat higher premium.

Also, factor in the up-front costs of gas and electricity certification and any repairs/decorating that you need to do to let the property.

From all you've said, it sounds as though making the move is definitely the right decision for you and your little girl (as long as you are sure of getting a school place), and I think you should do it. Just bear in mind that there are inevitably unexpected expenses involved in letting out your property.

ALIBOBSY

If you can sell even just for enough to cover your outstanding mortgage (and hopefully the selling fees and removal costs) it will be worth it for peace of mind. May be worth asking a local auction house to give a realistic selling price to you.
A fresh start is much less hassle, but good luck whatever you decide.

ali x