Some advice needed on renting dilemma

peter7769

HI
Im hoping to get some advice as im unsure as to what to do, its along story so please bare with me.

My dad has just beem put into a care home at a cost of £1300 per month, he has around £45k in savings and a 3 bed house which we think is going to be valued at £300k.
We are cuurently using his savings to pay for his care home fees but i want to rent out his house so that we can use the rent money to pay for some of the care home fees and then use his savings to top it up, i have spoken to my mortgage advisor who has told me that we should get around £900 per month and that this is the best way forward rather than selling the property right now, my sisters unfortunatly are not in agreement and think that we should sell the house and then invest the money into a high interest account and use that money instead.
But i cant see us getting £800 per month interest? plus also we need access to the money to pay for the care home so we obviously cant lock it away for years and years.
Like i said my mortgage advisor has said that we shouldnt sell the house as the money will fritter away to nothing and the value of bricks & mortar is always going up, plus if we have tenants in the property it will be looked after and maintained so when it comes to selling it, it should be easier.

please can someone give me some advice?

Thanks Pete

G_M

If you rent:

* talk to 3 or more local letting agents and get realistic figures for monthly rent.
* then do a full business budget, including tax on the rent, agent's fees, etc (see link below)
* remember rent is not guaranteed (gaps between tenants, tenants who don't pay etc) and unexpected bills will arise
* factor in the stress of renting a property

If you sell,
* will you get £300K? Or is there a mortgage to pay off? Bear in mind agents selling fees and legal fees etc.
* lets assume you end up with £290K
* in a savings acount, at 1%, that's £2,900 pa, or £241 pm
* by careful shopping around you might get a bit over 1%, but not a lot!


Either way, I assume you have POA to do all this?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

lynz68

I can't really advise you what to do as I have never been in that situation. What I would highlight is that being a landlord is not as straightforward as you seem to think it will be. You become responsible for all the maintenance for a start. Who will provide the shortfall in between tenants? What if a tenant stops paying and you have to go through an eviction process which can take months. You have to have landlords insurance who pays for that?

I would suggest you look more into what being a landlord actually involves. I'm sure some landlords will be able to advise you.

Though as other siblings are involved it's not just up to you. If I was in that situation I would probably just sell.

peter7769

G_M wrote: »

If you rent:

* talk to 3 or more local letting agents and get realistic figures for monthly rent.
* then do a full business budget, including tax on the rent, agent's fees, etc (see link below)
* remember rent is not guaranteed (gaps between tenants, tenants who don't pay etc) and unexpected bills will arise
* factor in the stress of renting a property

If you sell,
* will you get £300K? Or is there a mortgage to pay off? Bear in mind agents selling fees and legal fees etc.
* lets assume you end up with £290K
* in a savings acount, at 1%, that's £2,900 pa, or £241 pm
* by careful shopping around you might get a bit over 1%, but not a lot!


Either way, I assume you have POA to do all this?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

Many thanks, there is no mortgage to pay and I think it will only be one tenant as it would be a short term let as my dad's savings will only last until December. And yes I have full power of attorney.

Kim_kim

Something my mother considered when she was alive but never did, was to rent to the council.
They pay you less, but basically it's guaranteed income & I think they did the repairs too.

peter7769

lynz68 wrote: »

I can't really advise you what to do as I have never been in that situation. What I would highlight is that being a landlord is not as straightforward as you seem to think it will be. You become responsible for all the maintenance for a start. Who will provide the shortfall in between tenants? What if a tenant stops paying and you have to go through an eviction process which can take months. You have to have landlords insurance who pays for that?

I would suggest you look more into what being a landlord actually involves. I'm sure some landlords will be able to advise you.

Though as other siblings are involved it's not just up to you. If I was in that situation I would probably just sell.

My mortgage advisor actually has a letting agency as well so she would look after everything like that, I know it means we get less money but also less hassle.

Pete

Pixie5740

peter7769 wrote: »

Many thanks, there is no mortgage to pay and I think it will only be one tenant as it would be a short term let as my dad's savings will only last until December. And yes I have full power of attorney.

How short term a let do you envisage? Only until December? If that's the case your sisters are right just sell now.

pmlindyloo

I think renting out the house could be a good idea.

You need to do some calculations factoring in letting fees, tax, etc etc. ask the letting agent about these.

Presumably your dad is receiving a pension? Is he entitled to Pension Credit? Is he claiming Attendance Allowance?

With the rent and his pension plus Attendance Allowance he may not use up his savings quite so quickly.

But, are you sure the care home fees are £1300 a month?

Marvel1

If deciding the landlord route, please research on what you must do as it's not fair on tenets and can also cost you. It's not as simple receiving a monthly income.

peter7769 wrote: »

Like i said my mortgage advisor has said that we shouldnt sell the house as the money will fritter away to nothing and the value of bricks & mortar is always going up.

Not aimed at you, but the adviser as 2008 springs to mind, unless some areas weren't affected.

Probably explains it

peter7769 wrote: »

My mortgage advisor actually has a letting agency as well so she would look after everything like that

G_M

peter7769 wrote: »

Many thanks, there is no mortgage to pay and I think it will only be one tenant as it would be a short term let as my dad's savings will only last until December. And yes I have full power of attorney.

In that case forget letting.

By the time you factor in letting set-up costs, agents fees, tax etc, it won't be worth it for 6 months max. Either financially or practicaly.

And if you need to sell in Dec, what if the tenant does not leave? Till forced out by the courts in May 2018?

Sell.

ps- call me cynical, but might the adviser be more interested in adding a property to his letting business portfolio, than in giving the best financial advice to his client.........? Conflict of interest.

AdrianC

£900/mo...

That's about 3.5% yield.

- before agent fees.
- before any redecoration and maintenance (old people's houses are not usually suitable for rental without refurb).
- before tax.
- before voids.
- before any non-paying tenants.

You can do a LOT better than that. Get thee over to the savings and investments forum.

If you've REALLY set your heart on earning the money from lettings, then at least sell the house and buy two £150k flats. You'll get a better yield, better protection against voids, and lower outgoings.