Home owner in debt - what are my options?

BlueSkyProspero

Hi all,

I'm hoping to get some financial advice here... I would really appreciate your time in looking through the following details.:)

I own a small property (flat) in Dorset and I live in London where I run a charity which is extremely hectic but is my passion. I managed to buy the flat 11 years ago when mortgages were a lot easier to obtain and when I had a 'sensible' job. I've been letting it out since then.

I have debts - about £8000 worth of credit cards and overdraft, and obviously renting in London is expensive but it's where I want to stay and where I've started my charity. I do not earn enough to save anything each month, or pay off more than the minimum on the credit cards.

My tenants in Dorset have caused some destruction in the property and the lettings agents turned out to be untrustworthy & unprofessional. I have had to fumigate the place after they left fleas and bedbugs and the property has some damage for which I need a builder. I have found it very stressful having to visit there every weekend to sort things out at some cost whilst juggling busy work etc. They also left damp so basically the whole place needs renovating / redecorating.

My choices are as follows:

1. Sell the property (after building work, fees etc I think I could make up to £10K or if I'm lucky £15K profit).
CONS: My monthly income would then be less by £300 pm (the profit made from rental income after mortgage payments).
PROS: I would not have to manage the property on top of responsibilities in London
THEN: Try to get onboard the London Shared Ownership ladder with some of my proceeds from the sale (although would need to pay off the £8000 debt first leaving not much?) I might be able to do the Rent to Save option in the meantime where you pay a reduced rent and save up the rest of the small deposit required.

2. Keep the property, pay for all the work required (from a loan?) and let it out again trying to find a better lettings agent.
PROS: Keep the £300 profit per month.
CONS: This option would mean I would have to keep renting in London and have another loan to cover building work

I am also thinking about my future here as I am 34 (F) and need some sort of pension / future option.

I would be so grateful for any advice from any of you. Thank you so much in advance!

Propsero

sourcrates

Hi,
What kind of building work is needed ? I don't know how your DIY skills are, but is it something you can do yourself ?
Most jobs around the house are doable, even for someone with little or no experience.
I am a self taught DIY`er, I have done most things, like ripping out, re-fitting new bathroom suite, tiling, basic plumbing, pipework, fitting new kitchens etc.
It would save you some money if you could attempt these jobs yourself, as it would probably be a good idea to keep the rental place as a source of income for you, and there would be no need to finance the repairs through a new loan, hence adding to your debt.
Damp can be sorted with a dehumidifier once the source of the damp has been identified, and redecorating is a doddle, few tins of paint and a weekend.

BlueSkyProspero

Thanks for your reply Sourcrates. I didn't expand on the building work in my original post but it is significant. A flooding room which requires a waterproofing membrane treatment and subsequently a new bathroom and floor as the builders had to rip out to get to the root of the problem, a severe case of rising damp and wet rot requiring new window and door frames.

It isn't something I can do myself although I am very handy and will be doing all of the redecorating and DIY myself where at all possible.

Does this alter your advice at all?

Many thanks

moohound

Do properties in the area let out easily? How much would your profit go down if you have to service a loan as well?

BlueSkyProspero

Good point, thank you - and I probably wouldn't get a loan either. My gut feeling is to try to sell it and get rid of the hassle and stress it has caused. I will be £300 worse off every month but have the chance of paying off my credit cards and starting afresh.