mikeyb10supra Posted February 18, 2007 Share Posted February 18, 2007 im currently considering within the next year, attempting to retain my current property and buying another where I will live and obviously try to find tennents for the flat. I know some of you guys have done this in the past, can anyone offer any advice on the most cost effective method and best way to go about this?? Cheers Mikey Link to comment Share on other sites More sharing options...
DaveK Posted February 18, 2007 Share Posted February 18, 2007 Well, I've done it - but I think I'd say mine wasn't the most cost effective. You have one advantage - since you already have a mortgate on the property, you don't need a "buy to let" morgage which tend to have higher interest rates. But, assuming you do it all above board - you will need to tell your mortgage company that you are letting and they will charge you a few hundred pounds for "permission". With my lender, that permission lasted for 3 years - then I got to pay them again. Again - assuming you are doing it all above board - you will have mortgages across two properties, and it's best to have as much of the mortgage as possible on the rented one. This is because you will pay tax on the rent (anything over the interest part of the loan) therefore it makes better financial sense to make no profit on your rent and to have a smaller mortgage on your main home. I tried to do this when I was buying my second house - but every mortgage lender I spoke to actually failed to understand why I wanted to remortgage my first house and max it out. I eventually got tired of talking to stupid people and left it as it was. I live 100 miles from my other house, and used a rental agency. They find tenants and "supposedly" manage the property - and it cost me 15% of the rent. But most rental agencies are crap. I moved to the current one years ago because the previous one made mistake after mistake. The current one has been better - but have made some mistakes closing the acccout down. Most agencies will provide a simple service to find tenants and carry out the necessary reference checks. This might be worth thinking about. I wanted management just because I wasn't there - so when stuff did go wrong with the house they could find people to fix it. The only other thing I'd say is - if you do do this, make sure you have a little money behind you. My property was only empty the times I chose it to be empty - but that's not always the case, and you may need to pay both mortgages for a while. Also - I never had any problems - but an ex of mine was also letting a flat and had tennants from hell, that stopped paying. She had to get them evicted, and then got an attachment to their earnings for the lost rent. I would have preferred to go round and kick their heads in but apparently you're not allowed to do that. Link to comment Share on other sites More sharing options...
Angarak Posted February 18, 2007 Share Posted February 18, 2007 Funnily enough I was briefly speaking to a couple mates about this yesterday. My mate recommended you only rent in 6 monthly blocks, dont rent for 12 months or more as you lose some 'rights' with regards to tenants sqautting in your property (basically, if your tenants are on a short term lease they have sod all squatters rights). He also recommended British Gas 'home care' or something like that, it cost him about £16/month and covered numerous things on his house (boiler, drains, etc)...and he said it was worth every penny as it would have cost him lots more if he hadnt been with them. Thats all I can remember from the convo sadly. EDIT Having just looked at the British Gas website, I'd say he was on about this: http://www.britishgasboilers.co.uk/homecare-from-british-gas.htm Link to comment Share on other sites More sharing options...
markjodrell Posted February 18, 2007 Share Posted February 18, 2007 From my experience with letting accomodation I have four words of warning " NEVER RENT TO STUDENTS" They will trash the place.... Link to comment Share on other sites More sharing options...
Adam Posted February 18, 2007 Share Posted February 18, 2007 6 months block is good thats what i did. be very careful as I had pikeys move in and started to deal drugs and grow the bloody stuff in the house. Make sure the agents do proper checks as they said they had but didn`t. Ended up police kicking front door in just before xmas last year and me out of pocket and an on going court case at the mo. It was surpose to be a 60 yr old women living there but she moved her son in who was known to the police and had no intension of living there herself. And i had no rights trying to kick them out had to wait the whole 6 months before i got them out. I know it was a bad experence and it doesnt happen very often but be careful. Also keep track of every thing that is paid and in the house when you rent it. Tescos does a renting package which has everything you need in it for £10. well worth having. I did get someone esle in after and it worked well so just be careful. Link to comment Share on other sites More sharing options...
DaveK Posted February 18, 2007 Share Posted February 18, 2007 He also recommended British Gas 'home care' or something like that, it cost him about £16/month and covered numerous things on his house (boiler, drains, etc)...and he said it was worth every penny as it would have cost him lots more if he hadnt been with them. A friend has that British Gas thing on his own home - mostly because he travels a lot on business and needed stuff fixed quickly if it went wrong when he was away (wife / kids). I think whether you get that or not depends a bit on the age of your property and the gas etc. I rented by house for 17 years - I never had a problem with drains, or electrics. The only problem I had was the pilot light going out on the boiler once - easily fixed and a lot cheaper than the BG costs. In the time I had the property rented the main maintenance problems I remember were : fences blowing down back door (wooden) sticking / leaking Oven died That's about it I think. Note that I rented unfurnished which has some advantages (i.e. when it's empty, I don't have to pay council tax). Link to comment Share on other sites More sharing options...
mikeyb10supra Posted February 18, 2007 Author Share Posted February 18, 2007 There are a lot of factors that worry me but also a lot that are very apealing, how do mortgage companies react to you retaining a property and then trying to get another mortgage for another property?? will they still give me 3.5 times my salary etc?? We have a management company here at our flats who deal with all emergency cover, ie drains, pipes, floods etc so I think that should cover what the tescos insurance covers How easy would you say finding tenants is, as this is something that worries me, are they fairly easy to find, providing there history check is up to scratch Link to comment Share on other sites More sharing options...
DaveK Posted February 18, 2007 Share Posted February 18, 2007 There are a lot of factors that worry me but also a lot that are very apealing, how do mortgage companies react to you retaining a property and then trying to get another mortgage for another property?? will they still give me 3.5 times my salary etc?? That depends how you do it. If you max out the mortgage on the rented property, then - no, they won't (it would be 3.5 times your salary for both). However - if you can minimise your mortgage on the rented property then they will. When I bought my second house they didn't care about the first one - I can't remember if it was because the rent was 1.5 x the mortgage payment or because the house was more than 1.5 x the mortgage. I think it was the first one - I know it had the figure 1.5 in it. Link to comment Share on other sites More sharing options...
DaveK Posted February 18, 2007 Share Posted February 18, 2007 Finding tenants probably depends on the property, the area you're in - and how you do it. I never had a problem finding tenants for my house (at least, the agencies didn't). Link to comment Share on other sites More sharing options...
Al Massey Posted February 18, 2007 Share Posted February 18, 2007 From my experience with letting accomodation I have four words of warning " NEVER RENT TO STUDENTS" They will trash the place.... and never rent to friends,it will ruin your friendship,i rented out my house to my wifes mate and then a few months down the line we got the "were a bit skint at the mo,can we pay double next month" line and it nearly bankrupted me,our house is 200 miles away and was hard to sort things out,didnt make profit on the rent but got 2 years of the mortgage paid for,so im laughing now,we just sold the house wit £39k profit in my pocket Link to comment Share on other sites More sharing options...
mikeyb10supra Posted February 18, 2007 Author Share Posted February 18, 2007 That depends how you do it. If you max out the mortgage on the rented property, then - no, they won't (it would be 3.5 times your salary for both). However - if you can minimise your mortgage on the rented property then they will. When I bought my second house they didn't care about the first one - I can't remember if it was because the rent was 1.5 x the mortgage payment or because the house was more than 1.5 x the mortgage. I think it was the first one - I know it had the figure 1.5 in it. Ahh ok, thats pretty good then, I have a 100% mortgage on the one thats going to be rented so thats ok! I guess its probably not really stretching myself on the new place then just incase! Is there anything that will cover me in the case mentioned above where tenents are not coughing up rent Link to comment Share on other sites More sharing options...
DaveK Posted February 18, 2007 Share Posted February 18, 2007 Ahh ok, thats pretty good then, I have a 100% mortgage on the one thats going to be rented so thats ok! I guess its probably not really stretching myself on the new place then just incase! Is there anything that will cover me in the case mentioned above where tenents are not coughing up rent I think you misunderstood. If you have a high mortgage on the property that will be rented, that will count as part of your 3.5 x salary allowance which will not leave you much to buy elsewhere. Link to comment Share on other sites More sharing options...
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