Deciding the way forward for my exit?
Hi, Having been a landlord for nearly 30 years I have a dilemma in deciding my best exit plan. I have a portfolio of 10 properties (2 houses and 8 flats). They are all interest-only mortgages but on good terms. The portfolio is straightforward enough to run and I self-manage and work hard to have a good relationship with my tenants. So all is calm and working as it should.
However, at 54 years of age I need to start to plan my exit plan and how I will convert this portfolio of ten into a reduced amount of hopefully three mortgage-free units that will, in turn, provide an income for my retirement. I would ideally like to retire at 60. I currently work running my own modest facilities management business, so I am financially self-sufficient whilst I remain working. I have no formal pension, so the rentals need to provide an income on retirement.
Four of the flats in the portfolio, which are good renters and attract top rates are on low leases (45 years). The mortgage has only 7 years to run at which point I will need to pay them off or sell to a cash buyer (they will not be suitable for a new mortgage due to the low lease).
I have just struggled through a lease extension on one of them at a cost of £44k including costs. I now need to sell this flat to get the lease outlay back and then serve notice on the next flat in that block to extend the lease and so on until all four flats have been extended and sold. It’s a shame because they are good flats.
After the lease extension costs and mortgages are settled I won’t have more than about £15k left after each sale. The benefit of these flats has been their location and the high rents they attract in relation to their value.
So would the more savvy investors on here have any ideas forward?
1/I am wondering whether there are lenders who will refinance a whole portfolio at a sensible rate and what the hassle and cost of doing that might be?
2/To carry on with the current plan to sell property a year until I have enough funds to pay off the last 3 mortgages in my portfolio and keep those three properties as my retirement income.
These are strange times to make big decisions but decide on a plan I must.
Any suggestions gratefully received.
David
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Member Since September 2013 - Comments: 6
6:37 PM, 24th January 2021, About 5 years ago
Reply to the comment left by David Dorset at 24/01/2021 – 18:10
100%, David from Dorset….i know enough friends and people for whom it is always and only a means to an end…like a sentence!
This one can have its ups and downs. But it gives you a lot of freedom, and the 3 of us have had many long European driving hols…..can’t do that on your 2 wks annual leave or whatever. Not that our daughter wants any more..she’d rather go with friends. They are more fun now!
Member Since January 2016 - Comments: 472
7:28 PM, 24th January 2021, About 5 years ago
As a few have mentioned Lease extensions and changes to legislation, I suspect that it still won’t be cheap, perhaps the same price for a 990 year extension as a 90 year extension with a bit of tweaking around marriage values. I also think the House of Lords might try to frustrate anything that harms their vested interests.
Member Since September 2013 - Comments: 6
8:18 PM, 24th January 2021, About 5 years ago
Reply to the comment left by Darren Peters at 24/01/2021 – 19:28
I agree to some extent. There are centuries of vested interest with skin in the game..but the Conservative Govt will win many brownie points by being right on and acting on behalf of the common man. And seeing as they barely behave like a true C govt, who knows.
Member Since February 2018 - Comments: 79
8:34 PM, 24th January 2021, About 5 years ago
Reply to the comment left by Darren Peters at 24/01/2021 – 19:28
Depend what you call cheap I guess. If you invest £50k and a year of emails back and forth to get the lease extended and after that the property is only worth £55k more than when you started then that is not cheap. But value is created by the market and i’d rather have a 900 plus year lease than a 90 plus year one. The perception of much better value will surely lift the salability and actual value beyond just a few thousand above the extension cost. As for the Lords, they didn’t do much about the tax rises, tenant fee bans and general war on Landlords of late. We will see but surely it has to go in the right direction. The government needs landlords and fewer and fewer seem to be entering the market now. The world cannot survive without beds to sleep in!