First Year as a Landlord

[wheypat]

So 18 months ago my wife and I took the plunge and bought a rental house that came with sitting tennants (students), as we wanted to use the house as a holiday home in the summer. The place was pretty run down and needed a lot doing to it, but it was liveable. We didn't expect making any money out of it for the first 4 years. So how's it gone?

The purchase was arranged to coincide with the rent being due. So my wife took ownership on Feb 1st 2016. She applied for an HMO license, which the local council said would be a renewal and cost £500. They sat on the application for 6 weeks before returning it saying it would be a new application, for a cost of £1,300. Given that the previous owner renewed in December 2015 this was a tad irritating. And the council decided that the doors needed new locks and the house needed a new fire alarm system (but 2 months prior it was OK). So we couldn't advertise for students for Autumn 2016 as she didn't have the HMO. However, the letting agent (as we live 300 miles away) arranged everything, so it was all seamless.

We spent 4 weeks there in the summer (I work from home) and cleaned

HMO came in August 2016, letting agent (the university's property department) placed 4 students (males who didn't know each other, which wasn't great) for the coming year and we were off.

We kept the university as letting agent as we were so distant and it seemed very sensible to do so.

And 9 months later we went back.

One room had been covered in posters and the blu tack had removed a lot of the paint. The student had attempted to cover up by repainting over the blu tack, but had used a slightly different shade of paint. One room the furniture had been re-arranged and the new lay out made no sense, so we put it back, to discover a circular burn in the carpet. In the shed I found a circular BBQ exactly the same size . . . . Phoned the agent who came straight round and arranged for the room to be repainted and the carpet replaced, the students to be invoiced (university covered the cost in the mean time). Guy for the uni explained that they will repay the uni, as the uni withholds their degree until the cough up.

So what have we learned?

Agent is taking 15% but worth every penny
Getting an accountant cost £200 a year but she is worth every penny for peace of mind and advice on what is deductible and what is not
Make friends with the neighbours, they keep an eye on it for us (and told us they had to go round 6 weeks into term to explain how the bins worked, despite us leaving instructions for the students). One of them cuts the grass for us (un asked for - we were arranging a gardener when he emailed to say he would cur the lawns for us) as he likes a nice neat lawn. He got a most excellent bottle of whisky in return for his efforts.

Return - last year a nominal 5.1%. Once improvements/repairs/licensees taken into account we came out with about £2,000 (or 1%). But as stated above we didn't expect to make anything for 4 years.

This summer the boiler and bathroom are being replaced. Next summer we will decorate from top to bottom and replace the carpets, the year after the furniture (so new beds, wardrobes etc.) and then the kitchen. Then into maintenance (hopefully)

And next year? 4 new students. Girls who are friends, so hopefully no BBQs in the bedrooms.

[PinkDalek]

An interesting read but re:

...

We kept the university as letting agent as we were so distant and it seemed very sensible to do so.

And 9 months later we went back.

One room had been covered in posters and the blu tack had removed a lot of the paint. The student had attempted to cover up by repainting over the blu tack, but had used a slightly different shade of paint. One room the furniture had been re-arranged and the new lay out made no sense, so we put it back, to discover a circular burn in the carpet. In the shed I found a circular BBQ exactly the same size . . . . Phoned the agent who came straight round and arranged for the room to be repainted and the carpet replaced, the students to be invoiced (university covered the cost in the mean time). Guy for the uni explained that they will repay the uni, as the uni withholds their degree until the cough up.

So what have we learned?

Agent is taking 15% but worth every penny ...

I'm curious why it was down to you to discover these items, rather than the agent on check out.

[wheypat]

Well, I am new at this - the paint job we didn't notice for a couple of days, it was only when the light was right you could see it.

And (this is more of a question) would you expect an agent to lift every piece of furniture to examine the carpet under it? The BBQ burn was under a wardrobe, so I can easily see why it was missed. But the university are good - when we met the agent he also mentioned that they had the house cleaned at the end of the term (the students got the bill for that as well).

[Lootman]

And next year? 4 new students. Girls who are friends, so hopefully no BBQs in the bedrooms.

Probably, but watch out for hair clogging the bathroom drains. Happens a lot more with female tenants. I had one female tenant who flushed cat litter down the toilet. It wasn't pretty.

Over the years I did this, I went back and forth over whether male or female tenants were the most trouble. On the face of it females can be easier to deal with. But even then, the nicest girl can have the worst boyfriend and he might be there more than she is.

I never had to deal with all these HMO regulations, but they seem to be getting worse. My youngest son bought a HMO-type property and he's already had some knockdown-dragout fights with his local council over some of their petty rules. I'm not sure I'd have the patience to do that any more.