10:14 AM, 25th January 2012, About 12 years ago 8
Last summer I met a very well heeled friend for lunch and listened as she commiserated her devastating investment losses over the past couple of years. She said “I need to get into property! It’s the only thing that I can rely on for the future and I’m fed up of hearing how much money my financial advisor is losing me – and he doesn’t even apologise!”.
I accepted the challenge of preparing a buy to let proposal for her based on the different markets, comparing returns in the local area and seeing whether it was student/HMO, family or renovation projects which would float her boat. Heady days, lying in the garden carrying out research courtesy of wi-fi – what better way to apply one’s brain? It was an interesting exercise as I’m so caught up with HMOs that it’s easy to forget the other markets. Doing the financial analysis vs hassle factor was enlightening too and, not one for numbers, I actually enjoyed fiddling around on Excel with percentage returns!
Report prepared, we ran through the options and she settled on three bed houses for the family market. Excellent, safe and there are loads to look at! Armed with her £500k virtual investment pot, I went shopping. Looking round other people’s houses, spending time chatting with estate agents in their Smart cars and viewing houses objectively rather than emotionally was a great experience. The last time I had access to so many strangers’ kitchens was as a consultant for Pampered Chef cookware selling utensils and bakeware to the host’s guests.
Shortlist was completed so she, her builder boyfriend (always a good idea to have a builder for a squeeze – great rates) and I finally settled on a mid terrace overlooking a park. It was a 2 bed with the bathroom in the back room but the plan was to cut it in half and make a small, but usable bed 3.
House has now been renovated and looks clean, airy, etc.; carpets are too light for my liking so we’ll just have to choose tenants who have a habit of removing their shoes. She asked me to meet her at the weekend and came out with the dreaded words “I’d like you to let it out for me”. Now, I’m not turning business away it’s just that my tenant find and referencing methods are different from a letting agent’s and, if I choose the wrong tenant, it’s my risk not someone else’s.
I met a couple of agents and I now have a warm glow of satisfaction that the potential rent is as I predicted and all the bits and pieces I recommended to the builder are correct for the rental market. The weekend was spent reading up advertising through property websites, reference checking and preparing a property inventory that would stand up in case of a dispute. The daft thing is, I do this numerous times a year for my HMOs but dealing with a friend’s pride and joy is nerve-wracking to say the least. If my tenant doesn’t pay I lose £80 per week, if hers doesn’t £800 a month is lost.
Needless to say, the letting agents are gagging for the instruction. I, in the meantime, baulk at the idea that tenants have to pay £100 per adult for credit and reference checks and my friend would have to pay 2 weeks plus VAT for the tenant find service. So I sit here weighing up whether I should take her money but potentially choose the wrong tenant and miss a vital piece of paperwork that will cost millions of pounds in the case of eviction or just hand the instruction to an agent who can have the house tenanted in a “matter of days” and blame him if it all goes wrong.
In the meantime, the HMOs are quiet, everyone’s behaving and paying rent, the police don’t have my addresses on their beat watch and I’m wondering if a nice, charitable mortgage lender fancies giving me a 100% HMO mortgage to provide accommodation for the new influx of the under 35s LHA claimants – anyone?
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