Concerns, Questions and Solutions for Landlords

With such a busy run up to the Bank Holiday weekend and the glorious weather we have been having, and personally enjoying, I have somewhat struggled to pen my latest blog. Earlier on today I received a call from John who wanted to discuss his property. After a quick chat on the phone we established he had one property that was left to him by his departed father and didn’t know which way to turn. The property was let to family initially so was relatively straight forward, until recently it became empty. So, Coffee it is then at my usual haunt Millsy’s!

John thought initially that since he had only one property he wouldn’t necessarily need, or indeed find someone who would be willing to help.

For the past 3 years the property was occupied by a small family but generally went ok and it was only when John started to think about how to relet by doing some online research he realised he needed some advice.

So, after going through some standardised questions and delving a little further we established the following. The property had no mortgage, this was an inherited property, standard 3 bedroom semi-detached family sized home and only just recently decorated. An EPC database search indicated an energy performance rating of D which is within the new rules set up. Initial thoughts, perfect rental property for the current market demand.

I suggested that we finish our coffee and go and look at the property. First impression was very good (this is what potential tenants see when arriving at a viewing and increases the odds on having a tenant quicker).

I told John that it was a very rentable property and it opened a few opportunities for him now that it was empty. These opportunities were thought provoking.

  • He could just stay with the one property. Use the rental income as cash flow and extra income.
  • He could remortgage the property and use the cash raised to purchase more, but, keep the LTV low, this would, if done right increase his cashflow and his asset value.
  • Sell the house and buy as many as possible in a LTD company name, to be able to claim the relief on the mortgages, we would need to explore if this was a benefit to him.

Option 1 was straight forward options 2 & 3 would require a lot more work to ensure that the properties were sourced right and they delivered the yield and cashflow. I explained that this would entail a Property Sourcing plan to be set out ahead, there would be a charge for this service. John initial thoughts were he was not sure if he could do this on his own and work full time.

With those options in mind John seemed a little more informed, I could see the workings of an idea coming together! We arranged for John to pop to the office in a more formal setting where we could get to grips with the finances and figures. Before John even got to the office he had already decided the Journey he wanted to take, the reason I say Journey is he has decided to go ahead with valuations on the property and will be looking to explore option 3. Great news for John on the path to future financial freedom.

UPDATE:

John’s valuations came back at an average of £260k, coupled with the remainder of the liquid assets from his late fathers estate he was floating with around £300k. Far more than he could have imagined rolling back 1 week! So, John agreed and signed the Property Sourcing contracts enlisting Godiva Estates to source the properties once the house was sold. John’s vision seems clear, explore the Working Professionals and the Coventry University/Warwick University tenants. With the expansion of Coventry University and Jaguar Land rover, Amazon and other centrally located business that have been developed recently I can see the thinking behind John’s enthusiasm and logic. Of course there was a 4th option, sell up and run with the money, John was quick to quip “That amount of money wont last forever”.

With that said we had better get started.

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