First Time Landlord

HorseMonkeyMagnet

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Update moved to : 'House Buying, Renting & Selling Board' (i would put the link but i'm not allowed )


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Hi Everyone,

My mum recently had a surprisingly large sum of money left to her by my Grand dad and I figure the best thing to do is to invest it in property. Sadly my mum is deaf and struggles with a lot of things so I am trying to help invest her money but I will probably end up managing the responsibility. (note this does not mean i will be taking the income)

Currently I am considering 2 options

a 2 bed bungalow to rent to young families at 500-600pcm.

A 4 bed house rented as Multiple Occupancy to short contract individuals at 400-450pcm (each but all bills included).

Both of these address a need in the area that I would feel personally good about addressing (im hoping to create a more win-win situation then a me fleecing people situation).

Technically the 4 bed house option is the higher yield and greatest need. There are so many people in my area at the moment who have got on the first rung of the career ladder at a local big company but the big company are taking major advantage of them by putting them on 2/4 month rolling contracts. This means they can't rent places on 6/12 month contracts and end up staying in B&Bs or commuting large distances (I currently have a lodger due to this circumstance). I really feel i could offer them a better housing situation and it would be a win win for all. However as a first time landlord I am aware that there are many potential headaches to Multiple Occupancy and as I am also a first time father I fear that I would have little time to be properly on top of it. That being said we have found the perfect property close to us and would be accepted on a BTL mortgage, but it would mean investing all of her money in the one place and that makes me feel uneasy. We also have people around us willing to help out (I have a friend who cleans and gardens for rental properties who has offered to do it at a good rate and our neighbors are all just ace with plenty of trade skills between them)

The Bungalow seems to offer the lower maintenance in the long term solution and in general is a much cheaper initial investment but (apparently, not seen it yet) it will require more short term work then the house.

Also when it comes to buying property I feel I may not be "playing the game" right. My residential property was on the market for 125 and I got it for 113 fully furnished. But my previous flat I paid the asking price and in hindsight i was actually in a really good bargaining position so should have offered less.

With the house I have struggled to get the vendor to budge on the asking price of 130k, despite it being 120k when i initially made contact and despite it being on the market for more then 2 years. But she is a sweet old lady and the house is, i feel, a steal being 4 bed (although my estate agent says in my area nothing should go above 127k...). Part of me really wants to just pay 130 but it would push mums & my finances to the limit. I also feel guilty looking at other properties as she has taken it off the market while I "work out how to get 130".

The bungalow I am seeing for the first time tomorrow. I know that its a repossession and that its already gone down from 80k to 75k. If we were willing to put a lot of eggs in one basket we could potentially put in a cash offer (granted it would be a cheeky one). I also know that in general it is less desirable then the house, its location isn't as good and there a lot more 2 beds in the area then 3/4 beds with not as much in demand.

the final option is to get a BTL on the bungalow at a much lower deposit investment but obviously a lower monthly income.

I will be honest, if I don't invest all of her money then whatever I don't invest will either sit in a bad savings account or be spent unwisely.

However it isn't my money and I would like mum to keep some of it available to spend as she see fits but I also think that if she had an income of say 500pcm (with the cheeky bungalow) or (best case scenario if fully occupied multi-occ) 800pcm then she could spend that without worrying and potentially enjoy it more then she would if it sat in a savings account and she worried about everything she did with it.

I am currently trying to do as much research as possible but on a risk basis i am leaning towards the bungalow (starting with cheeky offers and hoping for the cash option).

I wanted to post here because I have used MMSE before (under a different username that i have since forgotten) and the support, knowledge and understanding was great and frankly I have never and will probably never have this kind of money all in one go and I really don't want to stuff it up, I love my mum to bits and I would love for this to allow her to really enjoy her money without worrying about what I will inherit and looking to the future we both see it as something that could be passed onto my son to fund his university.

I appreciate any and all advice you guys can give, Thank you

Biggles

I should try posting this on the 'House Buying, Renting & Selling Board' if I was you.

DomRavioli

If you're looking at a HMO, have you read up on the legal requirements (they are as long as your arm and then some)?

Local authority will be able to provide full information of what they require as HMO's must be registered with them.

Lot of work, regardless of where your heart is, the majority of people's heart isn't there, especially tenants.

bebewoo

Being a landlord/landlady is work, and there are a lot of pitfalls.
If you are not unlucky you can make money but one bad tenant and you can lose a lot of money / time / faith in humanity. I had a bad tenant and it was a complete nightmare, and the eviction process takes several months.
Even with good tenants you will need to be constantly on call to fix things, and if you use an agency it can be even more work as most are in the business of charging fees rather than managing properties.
I wouldn't put my dear old Mum through that.

HorseMonkeyMagnet

DomRavioli wrote: »

If you're looking at a HMO, have you read up on the legal requirements (they are as long as your arm and then some)?

Local authority will be able to provide full information of what they require as HMO's must be registered with them.

Lot of work, regardless of where your heart is, the majority of people's heart isn't there, especially tenants.

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Moved to : "House Buying, Renting & Selling Board" ( i would put the link but I can't)

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Yes i was originally looking soley at the house, but relatives have started to put me off HMO, I have started looking at the legal requirements and it is a pretty hefty read. I foolishly used to think it was just "put it fire doors and fire alarms in every room" but its looking like it needs a lot more investigation, hence me moving away from the idea...

My original hope was that i could rent it to the company, or at least have a stronger tie between the company and the house so that the tenants would treat it with the mentality they should treat it well or look bad in the company. However the company has shown no interest in any form of formal partnership.

its a very good point all round Dom, I think sometimes that my interest in HMO is being lead to much by my heart and not my head.

I hope you dont mind me pasting this quote and reply on the questions new home!