Loads of tenants waiting for one house – Who do I rent it to?

by Mick Roberts

9:58 AM, 14th November 2013
About 5 years ago

Loads of tenants waiting for one house – Who do I rent it to?

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Loads of tenants waiting for one house – Who do I rent it to?

Ok people, this is one of my most difficult choices over last 15 years of renting houses.

I always have loads of options and juggling about to do to keep people happy but in the next two weeks …..

I have two bed nice (ish) house coming up. Existing tenant evicted due to being a drunk and scratching neighbours cars!,

So amongst the dozens asking for this house, I have …..

  1. Joiner mate who is now homeless with two dogs, needs somewhere quick, will bring me £110 per week.
  2. Gal been with me approx four years in my 3-4 bed house, who wants to downsize, been asking me about a year. Will get £106 per week for her, but then I have people waiting to give me £160 for her current house (which I am currently only charging £117 for).
  3. Builder mate who’s son is homeless this Saturday, him and his missus working, quite sensible, Will get £110pw.
  4. Then here’s the real sentimental pickle …… tenant just got out of mental hospital to live back in three bed house where partner passed away. This property is bringing in £200 per week as he’s sharing with family member. He says needs to get out, as the house is bringing back memories and he doesn’t want to end up back in mental hospital. My emotional side is leaning towards him because I can see his mind his drifting towards how he was when he got admitted. Plus he needs downstairs a bathroom which 2 bed house has for him. Loads of tenants waiting for one house - Who do I rent it to

If I swap my existing tenants about, I create myself loads more paperwork, as I do Housing Benefit (HB) forms for them, but hopefully if I make the right decision it’s a short term pain for extra income and long standing tenant.

BUT, for years, income was high priority, then last few years or so, feeling sorry for people, letting them off with lower rents etc. and also lesser hassle to me. Now I’m thinking, let’s get all me mortgages paid off over the next 10 years or so, look after no. 1, ‘otherwise I could be in the crap in the future. At least with no mortgages left I will never have massive outgoings, so I will be reasonably safe. Then I can help these homeless people even more.

You might think this is a nice position to be in, but it’s not when you have it all the time. It’s not like when you sell one to highest bidder and never see the others again.

I had to to jot all the different scenario’s down as I was getting confused myself and I can see all sorts of answers coming back.

On Vanessa’s Property Tribes forum the other week I got one bloke telling me I couldn’t rent 2 bed house to woman with 6/7 kids. The other choice would have been to leave them homeless!

I’m not sure what to do because I want to pick the option which is the lesser pain to me and the tenants.

And my joiner mate will not be happy if he doesn’t get this house!

I don’t get a lot of houses come empty now, hardly anyone goes because I am good, because very few landlords want housing benefit tenants and because the Council has got no houses for them.

What should I do?

Regards

Mick



Comments

Mark Alexander

10:10 AM, 14th November 2013
About 5 years ago

They all sound like worthy causes Mick, you can't get them all in so whatever choice you make will be a good one despite what others might feel about your decision. You can't please all of the people all of the time so make a business decision on the basis they are all good causes for different reasons. If you try to pick the best charity case and get too emotionally attached to the consequences of telling some people you haven't chosen them it could be you in the mental hospital next!

You know these people better than me so you may well have a different perspective than I do.

Will the guy with the mental health issues prove to be a reliable tenant? What if he goes back into care?

How important is your relationship with the joiner friend? If he doesn't get the property will you lose a contractor who is vital to your business or can his skill set be easily replaced if you fall out with him?

The existing tenant who is downsizing seems like the best bet to me from what you've said. You know her and the financials look better. However, I don't have the benefit of knowing what you know about this long standing existing tenant.

The son of the builder mate may well be the safest option if his Mum and Dad will act as guarantors.

It will be interesting to read what other people think about this.
.

Neil Patterson

10:21 AM, 14th November 2013
About 5 years ago

OK Mick
Taking all sentiment out as no matter who you help all the others will not be happy with you.
Option 1. You will gain £110 pcw rent
2. You will gain £106 plus an extra £43 pcw renting the property she is moving from.
Hence total gain £149 pcw
3. Same gain as option 1 £110 pcw
4. What ever happens you will be needing to find a new tenant for the 200pcw property so financially no better off.

Therefore in purely financial terms and assuming it is a no win situation I would go for option 2.

Disclaimer: Some times you just need to go with your gut instinct.

Robert Mellors

10:30 AM, 14th November 2013
About 5 years ago

Option 2 sounds like the safest option, and you are rewarding your good tenant for being a good tenant for all these years. If you let the house to the woman who is downsizing, that then gives you a 3/4 bedroom house that you need to re-let, so how about offering it to 1, 3, and 4, as a house share option, as this would resolve the homelessness situation for joiner mate, builder mate's son, and the person recovering from mental health problems. You solve everyone's housing need, help your mates, reward your good tenant, and maximise your rental income, - everyone's a winner!!!

Mick Roberts

10:37 AM, 14th November 2013
About 5 years ago

I've had mate in van with me this morning, while we did our rounds. He said give the house your joiner mate, because he's very mate orientated, which I am on Sunday morning bike rides, but this joiner mate may not be the best with money & rent may not be forthcoming.

So my mate in van says buy more houses, which was my motto a few years ago, but those that know me a bit, know nowadays, I want more ski & sun holidays etc. & less work, & buying more houses wouldn't give me more time to do these things.

Yes I agree, if I don't think business, it could be in that position soon if I don't be slightly tough now.

Yes guy with mental health issues is very reliable, been with me approx. 2 years, but who knows what could happen?

Yes Joiner mate, if he finds out ha ha, could make things a bit harder for me in future, could make it easier with him in the house to get joinery bits done quicker & not as dear.

Ha ha, yes, Great minds think alike, the existing downsize tenant whom I can then get £160pw for her house for, is the one I am leaning towards.

And the son of the builder mate has just rang me, with majority of Landlords on this forum, they'd probably choose him as him & missus both work, & he is on his Dad’s sofa from this Saturday, it’s a horrible picking position I’m in.

And as I’m writing this, I’ve had another phone call & text off people asking for stuff. Wow, if I had twin brother who could think & act like me, we could buy some more. Problem with letting agents managing for me, they wouldn’t be as pro-active in the HB dept.

Mick Roberts

10:49 AM, 14th November 2013
About 5 years ago

Oops, as I wrote last comment, Neil’s & Roberts comments have now been posted.

Yes, 2 is the more finance sense option.

And 4, will make me much worse financially off, unless I get similar family, but at moment have none on my waiting list for this area, who want to share with brother sister etc., to bring in the extra rent.

I wun’t say she’s been good ha ha, but could get much worse. But no, not bad when she ruddy answers her phone.

Not even thought about the house share thing, brilliant idea, but I like my people to stay with me a long time, & with them not knowing each other, I’d then be HIMO Landlord, Council Tax issues, getting new single people in, not my speciality

Michael Edwards

10:54 AM, 14th November 2013
About 5 years ago

I assume you reference all your applicants, best through **MODERATED** or similar with a Rent Guarantee? Get each applicant to complete an application form with ID and then examine them in detail and pick the one which looks the strongest financially and covenant wise. Ask that person to pay their application fee and keep the others in reserve until such time as the selected applicant clears through and then you can advise the others they were unsuccessful.

Robert Mellors

10:58 AM, 14th November 2013
About 5 years ago

Builder mate's son will be on his dad's sofa, what about his missus, it could get very crowded on that sofa. Or if his missus lives elsewhere, surely he could move in with her?

I also specialise in letting to people on Housing Benefit.
Moving the woman from the large house will assist her as the rent will be more affordable (and more likely to be covered by the HB).

Offering the larger house to the others to share, means you can increase the rent if you wish, to take account of the HB that each tenant is likely to be entitled to (check the local LHA rates), and if any of them leave it gives you flexibility to reduce the rent to an amount affordable to two sharers, or you can find a third person to join the house share (and thus keep the rent level higher). The additional rent you will get can pay for the slightly higher wear and tear, plus give you more for your ski and sun holidays. It also reduces your risk, because if one tenant fails to pay, you still have the rent coming in from the other two.

If you don't want to do it as a HMO, then do it as a simple house share (joint tenants), perhaps to two of the applicants instead of three. That way you are not responsible for the Council Tax, and you are not responsible for finding new tenants for a room if one person decides to leave (as other person becomes liable for the full rent of the whole house).

Mark Alexander

11:05 AM, 14th November 2013
About 5 years ago

Reply to the comment left by "Michael Edwards" at "14/11/2013 - 10:54":

Hi Michael

We've had that debate with Mick before about tenant referencing. He works in a market where tenants would never pass referencing. It's like Mick operates in a different world to most BTL landlords.
.

Robert Mellors

11:17 AM, 14th November 2013
About 5 years ago

Reply to the comment left by "Mark Alexander" at "14/11/2013 - 11:05":

Although the tenants may not pass any referencing (I know my HB tenants would not), Michael makes a valid point about getting rent guarantors. I find that tenants that have rent guarantors (especially parents as the guarantors) care about the property more, and are more likely to pay their rent, than those without guarantors, AND it gives you extra security should the worst happen and you have to take legal action to recover rent arrears/damage costs.

In the case of the builder mate's son, and the joiner mate, if rent is not paid then the tenants may be able to pay off the arrears by doing free work for you. I have a tenant who is a plumber, and he got into arrears, but he is paying the arrears off by doing plumbing work for me, and I simply offset his invoices against his arrears.

DC

12:03 PM, 14th November 2013
About 5 years ago

I thought I would answer this before reading other people’s ideas first, so I may be repeating what has already been said.

First of all, as you say, looking after number one is the most important thing to consider first because if for any reason you end up in financial difficulties you wouldn’t be in a position to help anyone.

Most of your options sound like good fixes if they were your only option to fill an empty property, however with the choices you have, I would pick out the long term bets rather than the short term fixes. Helping out anyone that has suddenly found themselves homeless due to broken relationships often doesn’t add up to a good long term solution for you as they quite often either get re-established or find new partners and want to move on pretty quickly. Also helping out mates or family for that matter sometimes causes extra problems that can result in strained relationships with you so are best avoided in my opinion.

We find that with our one bed properties we have a constant turnover of tenants who are always looking to up-size, which is okay if the properties were chosen and purchased wisely by you in the first place. I can always fill them very quickly but the properties are a quick fix for these types of scenario and often by the end of 12 months or so tenants are moving on to bigger properties.

I think keeping hold of long established tenants that have looked after your property and paid their rent on time etc. are the ones to consider first, so in your examples (2 & 4) you would be choosing between the lady and the person that needs to get away from the past. Here is where your dilemma lies and I can’t really say who the safer long term bet is for you. That would be based on what you know about each possibility.

We recently lost one of our best tenants because he was after something a bit bigger with a garden so as we had nothing available at the time he moved on.
A month down the line we had a bigger property with a garden become available and on the same day a couple with all the right requirements, on paper at least, and somebody I knew, all looked at this property and all fell in love with it. The person I knew was a well-paid professional and had just split up with his wife and child and the other couple were both in work and receiving good salaries. I spoke at length with the single chap and having been in his situation myself just 7 years ago I could see what the probabilities would be in the next 6 – 12 months.

In the meantime the couple paid for and passed all the credit referencing checks with flying colours but the following day pulled out of the deal. This didn’t really change my view on the single chap but as luck would have it the good tenant we had lost the month before rang up out of the blue. To cut a long story short he successfully got himself out of his new property agreement as it didn’t suit him and a replacement tenant was found straight away for him and within two weeks he had moved into our bigger property with the garden!

Bingo, we now have a good tenant that had really looked after a previous property for 3 years and was back with us, hopefully for a good few years more. We have even discounted the first 2 months’ rent for him as a sweetener in the knowledge that it is worth more than constant change-overs of tenants and possible voids along the way.

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