Investments gone wrong!!

Pixie5740

MrsCurly wrote: »

The sole mortgage is in an ideal location for a B&B so one thought was to lease it to someone who could run a B&B? Or we move there and rent our current home?

Is there a market for people who want to rent a property in order to run a B&B?

MrsCurly_2

floopnoodle wrote: »

Hi MrsCurly

What is the monthly shortfall?
Why can't you increase the rent?
What is the estimated market rent vs what you are receiving?
What are your current tenants like and are they in arrears?
How much are you paying for management?

Just a few questions which I think will allow more people to help you.

The sole owned property:

-This had to be done as multiple room let so 3-4 different tenants in at any time.
-Rent does not include bills as we could not get anyone to take rooms for what we would like - increase rent would mean no tenants
-Mortgage is £805 pcm
-Total outgoings including bills and management: £1200
-Rent currently is 3 rooms let: 980 cpm
-Deficit of £220 on a good day
- Managed by a friend for £100 a month
-Tenants pay but do mess around, they haven't looked after property either and I mean they don't even clean so property has become dilapidated over time

First joint property:

- Mortgage £549
- Rent £500 (is in line with market rental)
- Managed by an agent so they take their fees before paying the rent
- Tenants good they pay no arrears

Second joint property (same building as first joint property)

- Mortgage £480
- Rent £475
- Managed by an agent (as above)
- Tenants good (as above)

I should also mention that the jointly owned properties are two flats in a block of 6 and has a rogue freeholder and management company so there is nobody paying communal bills and maintenance - we decided to pay the insurance ourselves in case the building falls down!

MrsCurly_2

Pixie5740 wrote: »

Is there a market for people who want to rent a property in order to run a B&B?

I'm not sure I'm trying to find out

floopnoodle

MrsCurly wrote: »

The sole owned property:

-This had to be done as multiple room let so 3-4 different tenants in at any time.
-Rent does not include bills as we could not get anyone to take rooms for what we would like - increase rent would mean no tenants
-Mortgage is £805 pcm
-Total outgoings including bills and management: £1200
-Rent currently is 3 rooms let: 980 cpm
-Deficit of £220 on a good day
- Managed by a friend for £100 a month
-Tenants pay but do mess around, they haven't looked after property either and I mean they don't even clean so property has become dilapidated over time

First joint property:

- Mortgage £549
- Rent £500 (is in line with market rental)
- Managed by an agent so they take their fees before paying the rent
- Tenants good they pay no arrears

Second joint property (same building as first joint property)

- Mortgage £480
- Rent £475
- Managed by an agent (as above)
- Tenants good (as above)

I should also mention that the jointly owned properties are two flats in a block of 6 and has a rogue freeholder and management company so there is nobody paying communal bills and maintenance - we decided to pay the insurance ourselves in case the building falls down!

Not as bad as I expected tbh.

The two jointly-owned properties don't look too bad. I mean they aren't great investments but I think they could quite easily break even.

I personally would ditch the management company for these two and increase the rent when next possible. If the tenants don't like it it's the perfect time to spruce it up a bit and charge a new tenant a bit more. (Not sure on the demographic of the tenant it would attract but round here a washing machine and fridge freezer included means you can charge a slightly higher rent than a completely unfurnished property for a relatively minor outlay)


Re: the HMO it's hard to know what to do without knowing the type of tenant but I know these are very popular at the moment (in the Landlord circuit) and there are lots of tips and tricks to maximise income. Landlord forums, Propertytribes and the Facebook group (Below Market Value) would be good places to ask for help and advice on that

Pixie5740

MrsCurly wrote: »

The sole owned property:

-This had to be done as multiple room let so 3-4 different tenants in at any time.
-Rent does not include bills as we could not get anyone to take rooms for what we would like - increase rent would mean no tenants
-Mortgage is £805 pcm
-Total outgoings including bills and management: £1200
-Rent currently is 3 rooms let: 980 cpm
-Deficit of £220 on a good day
- Managed by a friend for £100 a month
-Tenants pay but do mess around, they haven't looked after property either and I mean they don't even clean so property has become dilapidated over time

You say that rent doesn't include bills yet bills and management cost you £1,200 a month? Do the tenants pay for gas , electricity and water or are you paying for that but not including it in the rent charged to cover your costs? The council tax you will be paying as I suspect this is a HMO but that should be reflected in the amount of rent charged.


Is there scope to change the type of tenant this property is let to? I'm assuming there are 3 or 4 rooms so perhaps let it out to a family and then you'll really only have the mortgage to cover and you probably won't need to pay £100 a month to your friend to manage the property.


If not a family then perhaps a group of friends (young professionals or students) on a joint tenancy who also take care of their own bills.


Communal areas in a HMO can become messy as one tenant gets fed up clearing up after another tenant who seems content living knee deep in their own filth. The only time I lived in a HMO there was a cleaner who came once a week and did the communal areas. Just as well or I might still be serving time at Her Majesty's Pleasure.

MrsCurly_2

The rent coming in should cover the mortgage and bills and council tax but we have found that we need to lower the rent each time someone leaves just to get someone in there and have something coming in.

Would like to rent to a family but strangely it is a 4 bed house with no garden as one of the bedrooms is an ensuite that was built in a granny annex that takes up the court yard style garden that would have been there.

Originally this was purchased by my husband to convert into two flats but planning was never approved and since, property prices have gone down so in negative equity.

Cleaner once a week would be good as these guys are seriously disgusting! No wonder they are all single is all I can say!

Pixie5740

It's better to have a rental void and take your time getting good tenants than having the wrong tenants (mucky pups who pay the rent late).


Perhaps if you did get a cleaner in and spruced up the communal areas and bedrooms you could attract a better quality of tenant and therefore charge more rent so that you're no longer making a loss. Then you can start to get rid of the less desirable tenants.


I know if I was looking for a room in a shared house and the communal areas were minging that it would put me off.

MrsCurly_2

Thank you!

Any advise from anyone regarding the rogue management company/freeholder (both the same person)?

We wouldn't really want to take this all on by ourselves and be liable for maintenance and communal bills but I think this would also effect the sale price so looking for a silver lining somewhere...

Suarez

MrsCurly wrote: »

The sole owned property:

-This had to be done as multiple room let so 3-4 different tenants in at any time.
-Rent does not include bills as we could not get anyone to take rooms for what we would like - increase rent would mean no tenants
-Mortgage is £805 pcm
-Total outgoings including bills and management: £1200
-Rent currently is 3 rooms let: 980 cpm
-Deficit of £220 on a good day
- Managed by a friend for £100 a month
-Tenants pay but do mess around, they haven't looked after property either and I mean they don't even clean so property has become dilapidated over time

First joint property:

- Mortgage £549
- Rent £500 (is in line with market rental)
- Managed by an agent so they take their fees before paying the rent
- Tenants good they pay no arrears

Second joint property (same building as first joint property)

- Mortgage £480
- Rent £475
- Managed by an agent (as above)
- Tenants good (as above)

I should also mention that the jointly owned properties are two flats in a block of 6 and has a rogue freeholder and management company so there is nobody paying communal bills and maintenance - we decided to pay the insurance ourselves in case the building falls down!

If these are capital repayment mortgages then a part of the monthly mortgage payment will be capital.

You may well be making a profit just not thinking you are because the profit is tied into capital repayments and not cash you are receiving. Did your accounts last year show a loss?

MrsCurly_2

Suarez wrote: »

If these are capital repayment mortgages then a part of the monthly mortgage payment will be capital.

You may well be making a profit just not thinking you are because the profit is tied into capital repayments and not cash you are receiving. Did your accounts last year show a loss?

Unfortunately they are Interest Only mortgages