UK Landlord Forum / Life

Can I achieve £1000 pm cash flow after management+ bills from a £130k inheritance with NO leveraging of funds due to low income.
I am looking at areas in Wales.
2 x 2 beds with each room let separately gets me there. Any other ideas?
At all plausible?

Low income doesn't prevent leveraging.  The Mortgage Works (which is the buy-to-let arm of the Nationwide building society) have no minimum income criteria as long as your income isn't zero.  (If you have zero income, then buy one property for cash, establish a tenancy income, then borrow.)

See an independent financial adviser.  A proper one, not an estate agency mortgage broker.

Quote from: Tristam77 on October 27, 2019, 08:56:14 PMCan I achieve £1000 pm cash flow after management+ bills from a £130k inheritance with NO leveraging of funds due to low income.

Unlikely, in my view. My very general rule of thumb (for good properties and single tenancies and Northern rents) is £100,000 of investment gets you £500 per month. It's not always true... had a couple of good performers by moving areas slightly... so maybe £80,000 investment brings £500 to a max. of £525. Still some way off and I want to stay away from sharing as much as possible.

You cannot predict expenses in this game... always gotta cater for surprises. Things are getting tighter. Think again.

Quote from: Mortimer on October 27, 2019, 09:35:16 PM
Low income doesn't prevent leveraging.  The Mortgage Works (which is the buy-to-let arm of the Nationwide building society) have no minimum income criteria as long as your income isn't zero.  (If you have zero income, then buy one property for cash, establish a tenancy income, then borrow.)

See an independent financial adviser.  A proper one, not an estate agency mortgage broker.

Thanks didn't know this was an option.

Its possible.

£140k can certainly get you ~£1,100 a month in rental income around my area (North of England, near Wales). Need the find the right property at £70k, but the going rate is £80k for a rental house with £550 income.

£65k a house for a £500 is certainly doable. 

So in this worked example, if your purchase price is £80k freehold, plus £2.4k stamp duty and £800 legals for a total of £83,200.  You allow an additional 5% (so in this case £4,000) to bring the property up to scratch with gas and electrical safety certificates etc.  You go to, for example, The Mortgage Works and opt for their 75% mortgage at 3.19% fixed for five years on a pure interest only basis.  You borrow £60,000.  This means you've put in £ annual mortgage payments are (£60,000 x 3.19% =) £1,914, which is £159.50 per month.  You charge £500 a month rent, and you allow for the property to be empty two months of the year, so you're expecting £5,000 per annum in rent.  You allow £1,000 per annum in repairs, maintenance, safety certificates etc.  Your investment is £27.2k per property and your expected profit is £2,000 per annum per property.

That's an immense profit.  You can get it in very few parts of the country -- North Wales, Bradford, parts of Fenland, etc. -- where rents are high in proportion to property prices.  You'd want to investigate very carefully to be sure there's a substantial pool of good quality prospective tenants before you start to buy.  Make sure you're clear on portfolio lending limits and tax.

Avoid using lettings agents to manage your property.

Birmingham Midshires also do not require an income. I believe you have to go through a broker for both BMS and TMW.

Quote from: Mortimer on October 28, 2019, 05:15:50 PM...and electrical safety certificates etc.

No need for this. I realise it's a small thing, hardly worth mentioning, but we shouldn't allow this misconception to fester.

In law, there's no strict need for an electrical safety certificate but it's neither right nor ethical to let a property unless you're confident the electrics are safe.  And if you're not an electrician yourself, the only way to have that confidence is to get an electrician to check it.

Advising people to skip the electrical safety certificate is a bit irresponsible, Hippogriff.

I suspect the point that Hippogriff was intending to make was that some people (agents, electricians and sundry altruists...) would have you believe that there's a requirement to get the electrics professionally checked on an annual basis, in the same way that you need an annual gas check, when in fact, if nothing major has changed, a competent layman's eyeball will suffice.

Quote from: Mortimer on November 18, 2019, 03:05:46 PMIn law, there's no strict need for an electrical safety certificate but it's neither right nor ethical to let a property unless you're confident the electrics are safe.  And if you're not an electrician yourself, the only way to have that confidence is to get an electrician to check it.

Advising people to skip the electrical safety certificate is a bit irresponsible, Hippogriff.

You're 100% wrong. Please stop peddling such misguided nonsense right now. You have obviously fallen foul of the big con... you need to meekly realise this and correct the impression you just gave to a newbie. It is misleading. You do not need to be an Electrician to do electrical safety - your sentence here is absurd - under no circumstances did I suggest that anyone "skip electrical safety" - just the certificate part, but you cannot skip something you are not required to do. In contrast to yourself I am just secure in my knowledge that an electrical safety certificate is not required! This is not an unethical recommendation from me - it is perfectly valid. Please take back your unfounded accusation against what I said, publicly and immediately... we cannot allow this misconception to grow, especially growing from advice emitted by people who should know better... it increases complexity and costs in completely unnecessary ways (as stated by law, not opinion).

Quote from: Simon Pambin on November 18, 2019, 04:14:07 PMI suspect the point that Hippogriff was intending to make was that some people (agents, electricians and sundry altruists...) would have you believe that there's a requirement to get the electrics professionally checked on an annual basis, in the same way that you need an annual gas check, when in fact, if nothing major has changed, a competent layman's eyeball will suffice.

Layman's Eyeball. What a wonderful term. Concise and precise. The Electrician's Guild (!) would love nothing more than to have their own GSC equivalent requirement forced upon Landlords... ah, stuff that... all properties.

When my electrician gives me an electrical safety certificate, he physically writes on the electrical consumer unit the date of the next test which is in ten years' time.  I'll look you in the eye and tell you it would be irresponsible to omit this.

You're an idiot. You're doing things you don't need to do (for good reason) and you're advising others to waste their time and money doing things they don't need to do (again, for good reason). Just because you're a sucker doesn't mean that you can bring everyone else down to where you are and call others irresponsible if they don't follow your 'leading light'. All you have to go on, on this matter, is your opinion - a) about doing this in the first place and b) the idea of not doing it being irresponsible - just opinion, not fact. I asked for an apology.

What I had said was - "No need for this. I realise it's a small thing, hardly worth mentioning, but we shouldn't allow this misconception to fester." - which is pure and simple fact.

I accept that the electrical safety certificate is an optional cost, but I think it's irresponsible to skip it, and I shall not apologise for saying so.

I have asked you politely to apologise for implying that I am irresponsible regarding Electrical Safety Certificates where there is absolutely no legislation in existence advising that these are mandatory. As being a Landlord becomes harder and harder, costlier and costlier, it is down to people on forums like this to give out good advice, and - importantly - not mislead.

Now... your post certainly implied an Electrical Safety Certificate was part-and-parcel of what a Landlord needs to do - nowhere did you state it was optional.

All I did was to point out in the thread, somewhat gently, that an Electrical Safety Certificate is not mandatory - it is not required - and I said that we should stop giving this impression to new / potential Landlords... because they take that as gospel and then they waste money, time and effort - for no good reason (because if there was a good reason you can be assured it would already be required).

At that point you said I was irresponsible.

This is where you moved from fact-based argument to opinion-based.

And that is why I'd like you to apologise, on this thread, for saying I was being irresponsible. I don't think you can be irresponsible for highlighting the facts of a situation.

Your choice... but I have only called you out for offering incorrect implied advice - you can still hold your opinion that it's a good thing to do (many of my arguments are opinion-based)... the challenge to you is all about you referring to my correct fact-based advice as irresponsible when nothing is further from the truth. And, for that, I think I deserve an apology... you might think it's irresponsible to "skip it"... but you aren't skipping anything that, by definition, is not required in the first place - rather your decision is to consciously go above-and-beyond the requirements, as laid out in legislation... whether that's to make yourself feel good, safe, or you want to spend your money unnecessarily, I don't know or care - but this is not a Safety Certificate that is on par with the Gas Safety Certificate - yet you are placing them alongside one another.

Hopefully you can see the difference in the apology I'm asking for? I'm not asking you to apologise for your opinion, I'm asking you to apologise for your accusation that I suggested a Landlord should skip what is patently not required in the first place.

OK: I'm sorry that you were offended. 

Electrical safety certificates cost me £40 each and last for ten years.

Grenfell Towers was an electrical fire.

Those who primarily let recently-built houses where they can guess the wiring was half-decent when it was done, and where the properties have several exits, might take a flyer on this point, although I still very much disapprove.

Thank you for the apology - still a little weasel-wordy, but you got there (kinda, almost). I'll let it lie because it's now clear your advice is merely opinion, nothing more.

There's no flyer being taken. Your implications cannot stop coming out... electrical safety is done via visual checks, as required. Anything else / extra is above-and-beyond. That you choose to go above-and-beyond is all good for you - your disapproval of anyone who doesn't do things your way is totally meaningless until the law changes. The cost and longevity of electrical certificates is also irrelevant - what's relevant is your attempted (but corrected) hint that they're required and your comment that I was irresponsible for suggesting people "skip" it - you cannot skip that which is not required in the first place, it's impossible. I still don't think you get this point - you are very keen on pushing your own way of working onto others, and offering your disapproval of those that don't somehow makes you more professional, more caring, more aware - it does nothing of the sort - rather it implies you do not have a true grasp on your responsibilities as a Landlord.

Are you quite sure you're not an Electrician - I've had run-ins with Electricians who would absolutely love these Certificates to be mandatory - watch this space, right? 

Want to split this off into a separate thread about electrical safety certificates, Mr Moderator?

People come to this place, rightly or wrongly, looking for advice. Some of them are accidental landlords with flats in 1950s tower blocks, the old wiring hidden in polystyrene ceiling tiles. I've been to places like this. The accidental landlords might not have a lot of money themselves and are often willing to cut any cost. The message I want them to take away from reading this is that they need to be confident their tenants are safe and if they're not electricians, they should - - ought to - - get one to check. I don't want them to think "that's an optional cost" because although the law doesn't require it, in ethics they do have a basic duty to protect their tenants.

I'm not an electrician. I'm a former lettings agent who's managed hundreds of properties and seen a couple of nasty fires. I do think the ten-yearly certificates should be compulsory and I occasionally write to my MP about that, although he never takes a blind bit of notice.

OK - you've got serious attitude, your hackles are up, and you just won't accept when you're wrong. I get it.

For the last time - and no-one else brought Moderation into this - your advice was craftily designed to make someone new think they needed to do something they are not required to. You were corrected on this. You didn't like it because that's not the way you do things. It's all very crystal clear. Now you bring in headlines and your own multi-year experience to the debate. It isn't necessary for you to do this. Just accept your correction with good grace.

No-one is saying Landlords should get an electrical safety certificate - no-one is saying they ought to - no-one except you. Don't you get it? You're completely at odds with legislation... yet you don't accept it. Ethics aren't a part of this, you utter nincompoop, because electrical safety can be ascertained via the means every other Landlord takes - you don't need an electrical safety certificate because a visual check is enough to confirm safety (nothing extra is required). The fact that you don't agree with this, and see it as some sort of personal crusade, is completely besides the point.

Now... cease and desist. What you wanted someone to believe has been called-out as wrong, that's enough.

I'm asking you to fork this thread into a separate discussion on electrical safety certificates, which is a standard function of a forum moderator and I would have thought uncontroversial.

Your position appears to be that because it's lawful to skip the electrical safety certificate, it's therefore not irresponsible to skip it. Am I right?

Nothing is being "skipped", you imbecilic ex-Letting Agent. To "skip" something implies that it was "required" in the first place. This wasn't and isn't. What you are talking about is an add-on, an extra, something above-and-beyond, something additional, a supplementary certificate to make you feel... what, exactly? Better? Smug? Super-duper-responsible? I am at a loss to explain your persistence in classifying it as something that is "skipped"... not doing what you do is not "skipping it"... you still do the electrical safety, just in the way that you are recommended to do it - by visual check. Your assertion that only an Electrician can do this is completely farcical and shows a major lack of understanding regarding what this is all about... and you were a 'professional' in this industry? Pull the other one.

I think you still don't get it. You're ratifying my impression of Letting Agents, through and through - they. simply. don't. listen. Head-down, follow the path laid-out, listen to no-one and nothing... if you say "this is how it is" enough times people will fall into line.

Stop now... otherwise I'll [be reluctantly forced to] do a bit of different moderation. Time to let it lie.