Being a landlord

bert4567

I wanted to get some people views on becoming a landlord (England).  I know that i would need to get insurance, EPC, and I'm sure there's a couple of other things.  One of the Estate Agen's I was looking at, do the full service (obviously that would cost me a bit more) - am i being naive in thinking that this is going to make my life easier ? I obviously might get a phone call to tell me they need a plumber and i potentially need to pay for it, or something like that - but I'm assuming I just let the estate agent deal with organising etc...  I suppose in a sense i want to give it over to someone to manage for a few years before selling.  I've read people who haven't done it before saying how it was a nightmare, I'm just wondering if that's mainly about dealing with any day to day stuff - my thoughts (and they may be wrong) - were it wouldn't be that much hassle if the estate agents are dealing with everything ? What have others experiences been?

AdrianC

Of course a "full service" management will do everything for you... at a price. The first you know a plumber or electrician was needed will be when you get the bill, with the agent's margin added on.

The big question has to be... if you're paying that, will it even be profitable?
If you're looking at buying with a mortgage, then almost certainly not.
Without a mortgage? Then possibly, but nowhere near as lucrative as I'm sure you'd expect...

bert4567

working out the figures (and paying my tax properly) I can potentially bring in about 6k a year and I think I push that up to 10k as id be living somewhere a lot cheaper so would have a bit more disposable cash - so taking 10k of the mortgage a year - repairs permitting etc...  -AdrianC - yeah its related somewhat to my balcony neighbour issue and me wanting to get out trying to look at options as ive potentially getting some sizeable shares within the 2 years and could then look to sell at the end of those 2 years

AdrianC

Show us your numbers.

What is the flat worth?
How much mortgage do you have outstanding?
What rent do you think you would get?

bert4567

flat: 450
mortgage 300
rent £1500 (EA reckons 1600) but lets use that 
Been looking at some mortgage quote sites at interest only and then at the end of each year i'd look at trying to clear 10k unless there's been alot of repairs !

theartfullodger

Just because agent says they'll do everything doesn't mean they will.  Nor that they'll find decent tenants, inspect the place regularly nor pass the rent on to you.

Landlord remains liable for each and every thing.

To be a letting agent in England requires no qualifications,no training, no criminal record checks.  You or I could be up and running as one in 15 minutes.

You may or may not make money as a landlord.  Only proceed if you likes big gamble and can afford large losses.

There are over 100 Acts and regulations a landlord must comply with.  I doubt a majority of landlords do always comply on every property always.

Artful: Landlord since 2000

Cheers!

Durban

Will you be able to afford all the running costs and mortgage if you have a non paying tenant for at least a year which is about how long it will take you to get them out now?  Plus the legal costs. 

Will you at least be able to afford all the running costs in void periods plus another full months rent for the agents finders fee? 

How about if you need to replace the boiler.

All of these things can and do happen when you are a landlord and you need a good emergency fund behind you

A managing agent can take the day to day hassle at a cost but you are liable when things go wrong.

Alot of letting agents cause more hassle than not through miscommunication between landlord and tenant. 

bert4567

yeah fair shout on those last 2 posts - i get the feeling it would be easy to rent out, as its in a nice area with transport links into London bridge of about 11 minutes - but yeah i take your points on stuff!

AdrianC

bert4567 said:

flat: 450
mortgage 300
rent £1500 (EA reckons 1600) but lets use that 
Been looking at some mortgage quote sites at interest only and then at the end of each year i'd look at trying to clear 10k unless there's been alot of repairs !

By "£450" and "£300", you mean £450k value and £300k debt?
So at, say, 3.5% BtL interest-only mortgage, that's £875/mo.

Let's say the agent charge 10% for their management.
Then there's the actual maintenance of the flat. Let's average that out, long term, at another 10% of the rent.
Allow 10% of the rent for voids.
You haven't mentioned service charges for the flat...?
Are you a standard or higher rate tax payer?

Assuming £450/qtr for service charge, and standard rate, you're getting £20/month in your pocket in return for taking the risks with your £450k asset. Even if you view it as return on your actual equity, £150k, that's about 0.16% per annum.

Of course, that presumes that everything goes smoothly.
A friend of mine is currently trying to regain possession of a house she lets. The tenants last paid rent in October 2019... She has, of course, had to keep paying the mortgage on it over that period. She would happily write the unpaid rent off if she could have the keys back tomorrow. Gawd knows what state it will be in when she does get it back.

bert4567

Hummm ok - maybe I am being a little green about this, thank god for this website - im not into taking big risks with this so i think you guys might have answered my questions !

bert4567

Was actually looking at this - but to be honest everyting everyone else has mentioned this probably doesnt make alot of differance