is a property renting making no money better than a small investment ?

jimjames

Is the rent you are asking too high? All the reports (and my personal experience) is that good property at the right price will let almost immediately. We could have let ours to 6 different people and with no void - the new tenants moved in on the day the old ones moved out.

It is better to have a lower rent and no voids than a higher rent and many months with no tenant.

But from what you've said it sounds like selling may be the best option - if you can barely afford the mortgage what happens if the boiler breaks or some other emergency that needs cash.

If you are still on your normal mortgage not a BTL then have you got a fixed period before you have to stop - or is it actually a BTL? Your post wasnt clear if you'd lived in the house when you got your mortgage on it.

Blackdog

Reducing the rent to attract a new tenant may not be an option as you are making such a small amount of surplus each month. I share dunstonh's concerns that you might struggle to pay repair bills and cover longer term voids or tenants who don't pay. This renting business can be a bit of a nightmare! The low risk solution would be to sell the flat but if you put the profit from a sale into a savings account you would not earn a lot of interest. If you put it in a tax free ISA it might produce £450 a year for you.

slopemaster

If it was me, I would actively try everything I could do let the property - look at your advertising, your agent (if any), your photos, and of course your asking price.
BUT, it isn't me, it's you, and you sound like it's stressing you out. So maybe better to sell?
Or, combine the two - set a date (one more month?) when you will put it up for sale if it hasn't let. But don't just sit back and wait to see if it lets; really look hard at everything you can do to try to let it. And 'sell' this to your dp as a good compromise?

(I have been in a similar situation with property empty and costing me money in council tax and bills. I am fortunate in having no mortgage to pay, so less stress there - but was really quite relying on the income.)

As for alternative investments - it's very hard to find anything that keeps up with inflation just now. That's why my money's in property, as I trust that it will keep pace at least in the longer term. But I could be wrong of course, no crystal ball.

slopemaster

Oh yeah, and if/when you do let it, give serious thought to signing up for rental guarantee insurance to cover dunstonh's scenarios above. Yes it's another expense, but it's tax-deductible - and it sounds like you really can't afford to take the chance.

Piratipper

If you are struggling to make ends meet without a tenant in times of the lowest interest rates pretty much ever... then I think there is a major problem here.
It may seem like the base rate is going to be 0.5% forever these days but I assure you it wont. And when it is 1,2,3,4,5%+ and you're in this situation again you are going to be in deep trouble.
I don't think people should get involved in this kind of thing unless they are certain their cashflow can soak up the worst case scenario for a few months.
I wish you luck, but this looks like a disaster waiting to happen in the long term to me. Please be careful.

jimjames

slopemaster wrote: »

As for alternative investments - it's very hard to find anything that keeps up with inflation just now. That's why my money's in property, as I trust that it will keep pace at least in the longer term. But I could be wrong of course, no crystal ball.

I disagree with this - alternatives are available but they are not risk free.

You can get up to 5% on equity income funds which should keep pace with inflation long term.

Property may keep pace with inflation long term as well but short term there is a lot more risk as a result of the gearing and also the maintenance whether you are a hands on or hands off landlord.

For the OP it sounds like taking the money and putting it in a cash ISA would be far less risky if your financial situation isnt stable. If you want something that has some risk then putting part of it in a S&S ISA may be an option, but you really need to assess your attitude to risk.

A S&S ISA may not be more risky than a BTL house.

xylophone

If being a landlord is making your life a misery in terms of stress and worry, it would be better to sell, pay off your debts, put the full annual allowance into a cash ISA, perhaps use the stocks and shares allowance, and put the rest into the best paying on-line account you can find?

jimjames

Blackdog wrote: »

Reducing the rent to attract a new tenant may not be an option as you are making such a small amount of surplus each month.

True but look at these numbers, even if the OP was making a £10 pm loss by dropping £50pm they would be better off with lower rent

12 months at £550pm = £6600
9 months at £600pm = £5400

It only takes 1 month void at the higher rental amount to make the £550 pm work out better if it means there is no gap between tenants.
(The above numbers assume the higher rent actually gets a tenant in 3 months, so far that isnt the case)

samredleaves

All these replies are incredibly useful, thank you so much. I am so glad I posted this on today.

The mortgage on the property is from when I lived there 2006 and I have the same tracker mortgage, the bank let me rent the flat as I needed to move as I had a child and couldn't sell, they gave me an agreement but that only lasted a year and now I think they are just ignoring/forgotten

So yes it seems that the risk is high, I have a viewing on sat for renting, I will see how that goes and then reduce the rent if no one rents it. I will put it on for sale and then if it sells I will spread the money over some low risk and high risk investments. I like the idea of a long term stocks and share spreading over 20years ?? something to look into

I got my partner to read the posts and he has found them incredibly useful, thank you all. He has the same feeling about the flat now as me, what if something went wrong....so you have helped clarify our situation
thanks again

Thrugelmir

samredleaves wrote: »

the bank let me rent the flat as I needed to move as I had a child and couldn't sell, they gave me an agreement but that only lasted a year and now I think they are just ignoring/forgotten

Worth checking. As you'll be in default of mortgage contract terms. As onus is on you to renew the consent.