Becoming an LL for Student Lettings

Mark.Gates7

Since my time at university I have seen the 'gold' in student lettings and room renting. I could not do very much about that whilst a student and even less so after graduating however i am now reaching a stage where I believe i can set the wheels in motion and look to purchase a property on a BTL mortgage and begin letting to the Student market.

i will initially be looking for a 3/4 bedroom house and letting to 4 people. This will mean that it is not classed as a HMO within the LA i would be purchasing which should keep matters simpler for my first venture.

from my research local prices range from 250GBP upto and over 400GBP depending on the property and what is included on a room by room basis.

i look on the market and believe i can purchase a 3 or 4 bed house for less than 80K slap bang in the middle of the Student Accommodation hotspot. Market research tells me i can charge 300-400GBP a week inclusive of utility bills. now if i cut that in the middle at 350 across 4 rooms that is 1400GBP a Month.

All the above is all fine and to be honest if i have to pay 80K for the property i will be disappointed as there is some real good finds come up.

i see this as a great opportunity and think my only downfall will be in obtaining the BTL mortgage im almost 25 which is why i have held off untill now. i will have a depost of 15-25% i believe Natwest require 15% and Lloyds 25% but pretty unsure about many others as often 40%+ is required.

i can see the great earning potential here but really need help and advice on obtaining a BTL mortgage to get this off the ground, also any other advice on anybody else who has explored this venture.

P.S i have a plan B if i cannot obtain a BTL mortgage, but this is my fall back.

Fuzzyness

whilst i've also had similar thoughts to you, have you looked into what being a LL would entail. No disrespect to yourself but i'm sure your days of living in student accommodation are still fairly fresh in your mind, as are the issues with students not payin thier rent etc. if you can cope with these and other stresses that live will bring to you when you're dealing with not the most reliabel subset of the renting population go for it. sure others will provide more information on whether you can get a BTL mortgage for student letting.

Fuzzyness

sorry, have you also got enough capital to kit out the house once you've purchased it? four beds, four wardrobes, four chest of drawers, four desks/tables, sofa, cooker, etc.

G_M

Can't help with the BTL mortgage apart from recommending you shop around (deals change all the time) and consult an independant mortgage advisr.

This may be useful for letting hints.

Mark.Gates7

Fuzzyness wrote: »

sorry, have you also got enough capital to kit out the house once you've purchased it? four beds, four wardrobes, four chest of drawers, four desks/tables, sofa, cooker, etc.

Yes i have enough capital to provide furnishing, i may struggle to get tenants for a 'shell'

Mark.Gates7

Fuzzyness wrote: »

whilst i've also had similar thoughts to you, have you looked into what being a LL would entail. No disrespect to yourself but i'm sure your days of living in student accommodation are still fairly fresh in your mind, as are the issues with students not payin thier rent etc. if you can cope with these and other stresses that live will bring to you when you're dealing with not the most reliabel subset of the renting population go for it. sure others will provide more information on whether you can get a BTL mortgage for student letting.

Hi Fuzzyness, Yes i do remember certain issues arising but on the whole this was very rare and whilst on occasion rent may of been late and paid slightly delayed i do not recall anybody ever not paying or being removed for not paying. the greater issues came from damage to items within the building.

Fuzzyness

true. but damage needs repairing and hence issues with deposits/last months rent and all that. i lived with people who thought it was ok to not pay the last month's rent as a substitute for not getting their deposit back. depends on which uni city you're talking. likely to get less issues if its a uni where mummy and daddy are funding their little ones.

Mark.Gates7

Fuzzyness wrote: »

true. but damage needs repairing and hence issues with deposits/last months rent and all that. i lived with people who thought it was ok to not pay the last month's rent as a substitute for not getting their deposit back. depends on which uni city you're talking. likely to get less issues if its a uni where mummy and daddy are funding their little ones.

Thank you for the heads up on the not paying the last months rent, something i need to put precautions in place to avoid.

tbs624

Mark.Gates7 wrote: »

i will initially be looking for a 3/4 bedroom house and letting to 4 people. This will mean that it is not classed as a HMO within the LA i would be purchasing which should keep matters simpler for my first venture.

A property let to 3 or more Ts who form more than one household *will* be an HMO, albeit not a licensable one in some areas. You need to understand the difference between mandatory, slective and additional licensing.

Market research tells me i can charge 300-400GBP a week inclusive of utility bills. now if i cut that in the middle at 350 across 4 rooms that is 1400GBP a Month.

Having rent inclusive of bills is a good idea if you are the T - but not if you are the LL, not least because your Ts will have no personal incentive to keep the bills down. They'll be walking round in their shreddies with the thermostat up full and leaving lights on whether or not they are at home.

Would you have sufficient funds to meet the mortgage repayments and other bills if you had latepayers/non payers in situ?

Are there any of the "big boys" in the area - Unite, QI, Opal and so on?

tbs624

Mark.Gates7 wrote: »

Thank you for the heads up on the not paying the last months rent, something i need to put precautions in place to avoid.

It is one of the reasons LLs ask for a deposit of one and a half months rent equivalent

Soot2006

There is good profit in this business and provided the number stack up, you should be able to get BTL mortgage.

Do you already own a residential property? If not, you might need to approach specific lenders ...

Also make sure you are aware of the responsibilities of a LL - things can and do go wrong. While in my experience students are usually likely to pay their rent and leave when expected, this is in no way guaranteed and the usual court processes need to be well understood.