Potential Problem with letting valuation

1aleem

I think I'll ask around and try and get some valuations or else I'm doomed.

Are there any other monthly costs that I have to take into account apart from the insurance?

seraphina

I presume that the tenants still had access to the other bedrooms in this 5 bedroom house? Or had the landlady kept them aside with a view to renting them out separately? If the rooms were not kept aside for new tenants, then the price per bedroom is artificially high as it reflects the extra space afforded by the two "spare" bedrooms (and perhaps the extra bathrooms that one tends to find in larger properties).

IMO you would be better off comparing rental prices for similar 3 bed properties in your area.

westernpromise

1aleem wrote:

Well I disagree, I was a one of three tenants in shared 5-bed house in the exact same area myself. And the landlady's total rental income was £740 per month.

Fag-packet rule of thumb is that house price / 1,000 = weekly rent.

On that basis a house renting for £740 a month would be worth about £170,000.

What are you paying for your £550 a month house? About £130,000?

Is that mortgage repayment just the interest or interest plus capital?

1aleem

The House was advertised on the market at £129,000, so its close to that...and its a captial plus interest repayement.

ABN

1aleem wrote:

Are there any other monthly costs that I have to take into account apart from the insurance?

Now that question does worry me.

So many new BTLers risking it all without doing any homework at all.

No asking a few questions on this forum does not count as homework.

Yet another sign of too many property !!!!!! programs ...

Arch-Angel

seraphina wrote:

I presume that the tenants still had access to the other bedrooms in this 5 bedroom house? Or had the landlady kept them aside with a view to renting them out separately? If the rooms were not kept aside for new tenants, then the price per bedroom is artificially high as it reflects the extra space afforded by the two "spare" bedrooms (and perhaps the extra bathrooms that one tends to find in larger properties).

IMO you would be better off comparing rental prices for similar 3 bed properties in your area.

I have to agree - also was your LL (in the 5 bed house) looking for additional tennants or was she happy with just 3 people in a 5 bed house? If she was looking for additional tennants, could she find them? Why/why not?

I would also look at your "rental competition" - are there lots of similar 4/5 bed houses being rented out to students or nurses? Also, if you rent out to students then you've got a 3 month void to cover during the summer - are you able to cover that?

Don't mean to be the awkward one - however it's better to be prepared!!

clutton_2

Costs which you incur as a new landlord

house purchase fees such as

solicitor fees plus disbursements
mortgage broker fees
new carpets
redecoration

house insurance
contents insurance (carpets, curtains, white goods, fixtures fittings etc)
CORGI gas inspection fees annually
Servicing of gas equipment annually
providing some white goods/cooker etc
Electrical inspection
repairs,
letting agents fees
ground rent or
management fees if a flat
membership of a professional landlords body (CRUCIAL if you are new to this)
purchase of AGreements
advertising for tenants if you do not employ a letting agent
credit reference checks if you do not employ a letting agent

travel to and from the property to do property inspections
phone calls
letters
time
depreciation on your vehicle

and i have not really sat down and thought about this for very long either !!!!

still want to do it ???

1aleem

I was thinking about costs after the house has been signed over..but thanks Clutton for making things clearer.

Cara79

The costs that clutton has mentioned are when the house has been signed over to you (apart from the purchase costs!)

You have annual obligations and all sorts.

I really would get an idea of all the costs clutton has mentioned before going into this, especially if you're already going to be getting nearly £100 under your mortgage payment! What about if you have gaps where you can't get tenants etc?

Good luck if it's really what you want to do.
Cara

barnaby-bear

clutton wrote:

Costs which you incur as a new landlord

house purchase fees such as

solicitor fees plus disbursements
mortgage broker fees
new carpets
redecoration

house insurance
contents insurance (carpets, curtains, white goods, fixtures fittings etc)
CORGI gas inspection fees annually
Servicing of gas equipment annually
providing some white goods/cooker etc
Electrical inspection
repairs,
letting agents fees
ground rent or
management fees if a flat
membership of a professional landlords body (CRUCIAL if you are new to this)
purchase of AGreements
advertising for tenants if you do not employ a letting agent
credit reference checks if you do not employ a letting agent

travel to and from the property to do property inspections
phone calls
letters
time
depreciation on your vehicle

and i have not really sat down and thought about this for very long either !!!!

still want to do it ???

err you missed VOIDS
Capital gains tax - it's not your residence when you sell you have to pay this
cost of legal action/eviction/recovering costs for damage
time sorting out defaulted bills at the address, council tax etc
time compiling and checking inventories
and the furniture has to be regulation compliant
the deposit will now have to be held in 3rd party and you'll have to pursue for damages rather than deducting
oh yes and 3-bed is an HMO, new HMO legislation redfeined as such this year licencing currently up to local authority for les than 3 storey- you have to put in proper fire doors the really expensive ones on all rooms, a mains fire alarm, oh yeah and buy a license (£1k I think)
repainting every year or two
and you can't wait until cheap plumber available if the heating/water goes wrong you have to do it now witht he expensive type or devalue tenancy
if the house gets broken into you have to fix locks not the tenants - excess on insurance
time dealing with the neighbours (and now you are legally responsible) if they have a noisy party

hell I've only been a tenant and I know all this - I also know how to pursue and make landlord's life hell if they don't come up to scratch - you have to supply your address And if you skip some of legalities the small claims always award in favour of tenant and costs against you.