help with major house repairs intending to renting out

benawhile

Hello
I own a terraced house that I have allowed to fall in to disrepair, I want to repair it and rent it out with minimum fuss but minimum funds also. I have an absolute total of only about £10K.
In my area of Hampshire there were some help schemes from the council but they are currently "stalled".
The property is 60's built with a solid floor. It is structurally sound but needs major repairs/rebuild to the porch and patio doors, old wooden windows, some rotten.
Some replumbing required, wiring inspection, kitchen upgrade etc etc.
New carpet downstairs, maybe upstairs too, The interior decor is not good
I need advice finding a good builder and in deciding whether to rent it myself or get a letting agent, but I can't find any agency that will take over management of the work required.
Can anyone give me some pointers?
With thanks

theartfullodger

Repairs are the least of your worries

If you need to make repairs and have only £10k then I fear you will not have the financial (and quite possibly emotional..) reserves to cope with the "Tenant from Hell" (and/or the "Agent from Hell") where you find you're getting no rent for (say..) 7 months whilst you keep paying the bills/mortgage/legal fees-to-get-him-out and he then 'phones you 10:32 Saturday night saying "toilet's leaking you gorra fix it".. and you know you have to, at your expense, or the judge at the possession hearing will decide you've been harassing the poor innocent tenant... not to mention the unexpected large repair bill 2 months into the tenancy..

Find some more funds or find another business (sorry to be blunt..)

Oh, and btw repairs always cost 2-3 times what you expected & take twice as long. Then there's the Gas safety cert, getting the electrics checked, Landlord insurance (don't do without that - any other insurance won't pay out if it burns down...) etc etc etc etc..

Welcome to the "fun" world of property lettings...

benawhile

That's Ok, you can be blunt, and thanks for the warning, but I am not only in it for business, I am not living in the property, I am living with my partner and the property needs to be rented in some way.
There are various letting agents that provide a full letting service, I have contacted one, Belvoir, and they charge 10%, do you have an opinion on this method?
Although my finances are not brilliant I have at least fully paid the mortgage and I have no debts.

theartfullodger

The Interest on a mortgage (** Get a Buy2Let one **) is an allowable expense by HMRC against rental income...

IMHO you'd be very very very strongly advised to borrow some amount that will permit repairs, a slug for emergencies (I'd say £10-£20k ) and some more for any other rainy day (eg loss of job, illness, family crisis..). You can always repay later if things go well...

The worst position to be in is to find you've a crisis & no funds, IMHO.

That way you'll reduce your tax bill & be more financially secure... NB there are at least 7 taxes a LL can pay, and simply focussing on income tax may be "unwise".


Suggest btw you buy Carl Bayley's book...

http://www.amazon.co.uk/How-Avoid-Property-Carl-Bayley/dp/1907302263

10% is typical. Agents have a terrible reputation for not doing what they are contracted to do, for only caring about fees and being ignorant of the law.

If not already a member join (tax deductible) RLA & NLA and do a course like...
http://www.rla.org.uk/landlord/courses/course1.shtml

olias

AFAIK, the housing market in Hampshire is still moving. My advice would be to do it up as cheaply as possible and sell. You can then either invest the money however you want, or, if you want to keep it in property, then I would buy a newish flat or starter home that will rent easily with no voids, be zero (or at least very little) maintenance, and will be easily saleable when you want to free up the money again.

As far as doing it up, the works you describe are doable with your budget if you do the majority of the work yourself. If you employ a builder to do everything at home counties rates, then forget it.

Olias

Werdnal

I doubt you would get (or even should be considering) a council grant to renovate the property just to let it out. This sort of financial assistance is for owner occupiers who cannot afford to repair or maintain their properties.

Also, I would agree that if you are finding if difficult to afford to renovate it now, you would struggle to maintain it as a letting property.

But first of all, do you have a mortgage and have you permission to let from your lender? Some agree, some add extra clauses and costs, and others refuse - check it out first.

The 10% commission is pretty standard, but remember, you also need to make sure you have found a "good" agent - if possible get a personal recommendation - as there are no statutory qualifications required to become an agent, and if they make mistakes it can cost you money!

benawhile

Thanks for all this, I was wondering whether I will need more money and it looks like I will have to borrow more, which I can do.

In answer to Werdnal, I have established with the Council that renovation and repair grants are for local residents living in their own homes only. although they do provide other help for people in my position, as it is in their interest to have every available property in the borough habitable by any means.
My mortgage is paid off, as I said earlier.
I am grateful to you for the warning about the quality of letting agents, which I will take very seriously.