Renting out house then renting a room somewhere else!!

hellokitty08

Can someone please help me try to think of any arugements for / against my friend renting out his house, for £450 a month after agent fees, renting a room in a shared house in another part of the country for £400 a month and still having to pay the mortage on the house he owns. (currently around £550 a month)

I have tried to be as helpful as possible, I dont want to discourage him from going, I just want to make sure he has all the cold hard facts before he does.

He doesnt have to move for work (he works from home) I am thinking this might make him go a little crazy when he is just renting a room. He just cant seem to be happy where he is currently living. (although I think thats more of a problem with him, then the place)

Any help would be useful, I was going to do the yearly costs for him, including possible empty periods in the house, possible damage etc. (lucky for him im a letting agent, but that doesnt mean bad things might not happen)

mlz1413

£450 x 10 months rental (allowing 2 months voids)
gas safety & boiler service £200
LL membership & rent guarantee insurance £200 (approx)
general repairs/maint £100
cleaning at end of each tenant £200
Above is £4500 - £700 = £3800
please remember this list is short and anything added will reduced the amount again.

Your friends mortgage is £550, but I'm assuming he can afford this as he currently pays it.

Therefore the above incoming rental income less any tax due (only interest part of £550 mortgage can be used to offset tax) will go towards the out going rent on shared room, £400 x 12 = £4800

So if your friend is moving around the country to try and find somewhere he is happy then for a year it will cost him approx £1000. Long term this probably isn't viable.

As your friend will have to rent out house for or a minimum of 6 months they need to be sure they can put up with the decision for that time.

What about your friend getting a lodger then if he trusts the lodger go off for 2-3 months to new area, no long term ties and if you live local to friend could also ensure his house is ok.

Fire_Fox

If you take in a lodger and then move to a new area they aren't a lodger anymore! That is a seriously dodgy idea if you are going to become a landlord do it properly.

hellokitty08

Right I am confusing myself here! Thanks for the answers so far. He wants to do it properly so I have told him he must rent it out with an agency with a propery tenancy agreement.

I make the following sums,

He pays out
550 x 12 = £6600 Mortage payments
and
400 X 12 = £4800 rent on room he will rent
£175 on tenant find fee for letting
£60 for his gas safety
£75 for his epc
LL membership & rent guarantee insurance £200
TOTAL £11,910

he recieves
£475 x 10 = £4750 in rent (ohh i appear to have increased his monthly rental income, lucky him)

That makes about a £7160 difference a year in my book! Not sure how I have that so different from mlz1413.

Is that right! Gosh that would be a shock for him! :eek:

goldengirl28

why doesn't he sell it?

sorry if i've missed the point

that way he could rent while he is deciding where in the country to live

hellokitty08

Because he doesnt think there is enough equity in the house to make it worth while. Although im sure its not that bad. He bought it for £117,500 about 4 years ago, I think the mortgage is down to £105k, now. I am sure he could put it on the market for £120k.

TrickyDicky

Dont forget, as its a residential morgage he needs a conset to let - without this his plans might not be possible anyway. If they do consent they will charge a fee and may even up the interest rate.

hellokitty08

They have offered him consent to let for a fee of £250 for 12 months! I have learnt about that from on here, so have been his main point of advice. That and the fact I work in a letting agency. (just on saturdays though, so dont hate me for it)

Are my figures right? Is he going to spending £7k a year to rent out his house and rent a room somewhere else?

mlz1413

hellokitty08 wrote: »

.
That makes about a £7160 difference a year in my book! Not sure how I have that so different from mlz1413.

I didn't include his mortgage payments at all.
I just did rent in v rent out.
So all the bills he currently pays he would still have to - ie mortgage & ins.

You are right if he does this he will be funding renting out his own house.

PasturesNew

A lot of people wouldn't want to rent a room to somebody that works from home. Most people renting a room will expect you to be out at work during the day ... not in the house with the lights/heating potentially on, cluttering up the place dressed only in your underpants.

Apart from bigger issues, this is why I am not suited to sharing ... I keep very odd hours and will regularly be up 2-5am drinking coffee, going outside for a smoke/think ... and dressing like Waynetta for weeks on end. Although my "work from home" is entirely Internet based. People don't want to be sharing a house with people who creep about all night long.

hellokitty08

PasturesNew wrote: »

A lot of people wouldn't want to rent a room to somebody that works from home. Most people renting a room will expect you to be out at work during the day ... not in the house with the lights/heating potentially on, cluttering up the place dressed only in your underpants.

hahahaha, love it! that made me laugh out loud! :rotfl:I do get what you mean though. That plus the fact I think it would make him crazy! Sorry Crazierer!