Help: Becoming A Landlord Or Using A Management Company

alexneale442

Hello All

I am looking for some advice on a decision i have to make very soon.



I am going travelling in Febuary and i have a 3/4 bedroom house that i need to rent out!
I may be away for up to 2 years.

i am considering 2 options.

1. Going through a letting agent who will manage the property. [this option will lead to a monthly loss of around £200 after paying my mortgage, insurance, gas cert, etc..] I would like to avoid this, but i do have the cash to cover a certain amount of loss.

2. Renting the rooms individually and finding tentants through internet resources such as https://www.easyroomate.co.uk I would leave somebody i trust in charge of getting new people into the house and taking care of all house issues! By doing this i would probably not make any monthly loss.

The main advice i need is regarding the second option. If i am renting out the 3/4 rooms individually. what do i need to do to:

a. make everything legal and above board
b. protect my own interest
c. protect my tenants
d. any council requirements

Your advice and suggestions are greatly appreciated!!

gck303

If you are going to be travelling then managing a property from where ever you go is going to be a headache. The agent will take on the responsibility of managing the property, handling questions, getting things fixed, credit references etc.

You friend is very kind if they are going to do all of this on your behalf and not want any of the extra £200/month you will be making.

New legislation has recently been brought into affect for 'houses of multiple occupancy'. If you let the rooms individually, then it is likely then you will need to make changes to the property such as fire alarms etc.

Agents do take a big chunk, but a decent agent will also take a huge amount of the stress out of the process. Do you really have the time to do the 50 or more viewings you will need to do to get the place initially let?

George

franklee

That somebody you trust would be mad to take this on for nothing, especially if you are renting the rooms out individually. I don't think it would even be fair of you to ask!

Glad to see that you've costed the agent option up throughly, many don't, but unless you purchased recently with little deposit I'm surprised your monthly shortfall is that high. How much void time did you allow for? If you've a repayment mortgage, rather than interest only, then at least the 200 shortfall is going towards paying the mortgage off?

alexneale442

Sorry, i didn't mention that i would be paying this person an amount of money to act as a contact and take on some of the resonsibilities. Wouldn't expect this to be done gratis!

silvercar

HMO legislation will be a pain, as well co-ordinating indivdual rental agreements, particularly ensuring everyone is out by the date you want the house back.

I would be inclined to negotiate with a letting agent for managing the property. That way you know it is in safe hands and can relax. Mixing friends and business is a recipe for disaster.

Round here you would pay 15% of the annual rent for letting and management. Let to one family and you will avoid HMO problems.

alexneale442

also, i have only had the house for 2 years, rental income looks like around the £450 pcm mark after agent fees. the mortgage is a repayment one and was initially 100k, so total mortagage payments are at £615 pcm at the moment. In effect, the shortfall in rental income is going towards paying of the mortgage. Also, if the multiple-occupancy didn't work, i would have a letting agent ready to take over the management of the property.

The main thing i am looking for is advise on the multiple occupancy option!!

Thanks to gck and franklee for the interest and advise

alexneale442

tx silvercar

i am generally thinking that a managed option through a letting agent is the best option.
The fees over a period of time depend on how long the [e.g. family] tenants stay in the property. The letting agents charge 50% for the first month, and 10% for subsequent months.which work out at 16.6% over a 6 month period. If the tenant stays longer the rate will obviously reduce the longer they remain in the property [12 months in proprty reduce the amount to 13.3%]