Advice Please??? :o/

[geordie100]

Please help, any advice is appreciated.

I have recently bought and refurbished my first property, it was a complete mess and has been gutted and refurbed head to toe, the difficult bit is done i thought!!!

However, i am now finding the beurocracy surrounding the whole landlord business a little mind boggling as i am new to this!! I have an interested tenant, who incidentally has been made bankrupt. Also, they have approached me and asked if they can rent privately (Rather than through an agent) Great, i can save a few quid, however that means i have to do everything myself!! (By the way, the prospective tenants first found me via an agent, so i suspect this may be a little naughty!!!!! Can anyone give advice??) They have told me they can get a gaurantor. Who i understand i will need to get referenced and credit checked.

I understand once this is done and if i offer the particular prospective tenants the property i have to register witha TDS (Custodial i believe is best)

I also realise i can download the tenancy agreement from this site along with gaurantor forms. I also realise that for a small fee i can get the gaurantor checked out on a credit check website.....

I know it is wise to carry out an inventory prior to them moving in???

The bottom line is, have i covered all bases or is there anything else i need to be wary of?? Please please please somebody help me )

[Mortitia]

Hi Geordie,

Some of this was covered in a recent post ( read CH1, me and others) on 'Letting without an agent' further down the topic page and I'm sure others will add to what I think.

Personally, for a first let on your pride and joy property I might use the agent and not go for a bankrupt. But if you want to have a go or just do this as an exercise this is my format. Ask these things of your proposed tenants, yes it is paperwork but essential -

1. Ask for a previous landlord reference and follow it up in case they use a friend as a stand in. Most landlords will be happy to confirm or deny refs. I wouldn't accept 'we've been living abroad' or any such excuses.

2. Ask for employers refs for both of them and follow them up in detail (try to get landline numbers not mobiles and headed paper refs) to be sure you are not being conned.

3.Find out more about the guarantor, where they work and how he/she relates to them + the credit check.

4.I would want to know how tenant became bankrupt - just ask politely. You are about to let them rent a serious amount of your capital so you need answers and a genuine case will tell happily tell you. And how is the rent to be paid as he won't have a bank account.

Any bad vibes or things that don't add up should appear by now so any doubts say goodbye nicely and move on to the next set of tenants....there are plenty of good ones out there.

Good Luck,

Mortitia

[J4L]

Don't be tempted to take the 1st person that comes along.

People who have been bankrupt are few and far between, and are not a problem as long as you know how to deal with the situation if it goes belly up. Get your 'safety nets' in place and if you do experience problems then you'll have these insitu to deal with them efficiently and effectively.

Personally i'd suggest on your first venture, play the numbers game and don't take chances unless you know how to /are prepared to deal with them.

If you feel that you're not, then employ an agent to manage it for you. At least you will have cover if the tenancy goes sour.

This will be a massive learning curve for you so sit back and enjoy.

I'm going to ask you a ?

If you were about to spend £10,000 on a car what would you do to ensure that it was of good quality, safe and legal?

You'd have your own personal checks i.e. has an MOT etc and you may even pay the AA/RAC to do an inspection on it. You may then have an HPI check performed so you are assured that it's not stolen, on credit etc.

You would probably spend around £100+ on these checks for a car that is worth 10k.

Now that's only a small percentage of the value but the potential loss is much smaller in comparison to say a 100k property where you could end up with much more 'unknown' costly expenses (and I say this with respect because you have no idea what can go wrong and how much it will cost you).

You've asked BASIC questions here and although I'd normally say "all power to your elbow" that you were "having a go" we're not talking about a second hand car here for a few hundred pound we're talking of hundred's of thousands!!

Take my advice, let the agent who found you the tenant, manage it for you for 12 months or so and then take over the management yourself. In the meantime, keep visiting here and other good landlord forums and READ!

You will learn so much from these places.

[geordie100]

Thanks ever so much for your advice it is appreciated very much.

I now have a second potential tenant who say they want the property. However again, they want to bypass the agent who introduced them to me. I can't help bu be extremely tempted as this will save me in the region of a £650 finders fee!!! Also remember this is my first property and it has been tight on the purse strings. However, i can't remember if i'm tied in with the agent...

Can anyone advise on this??? Additionally, it is my property and my girlfriend signed any documentation from the agent, so i don't know if this helps...

I hope i'm not coming accross too much as a maverick (Or even dishonest!!) but when money is tight and you are trying to make a start in the big wide world of letting, i can't help but be tempted.

[Paulhar]

My experience of agents is that they do not care about your property anything like as much as you do. I have been letting four houses for about 6 years, I tried three different agents in the beginning and none of them did what they said they would. Maybe I was just unlucky.

What I always do is make sure a tenant knows that you need their rent to pay their mortgage, don't let them think you have cash to spare. Ask them to set up a direct debit to pay the rent and if it doesn't arrive in your account phone them immediately to ask why.

The only other legal issues you haven't mentioned are getting a Landlords Gas Safety Check done (around £45 per year if you shop around) and recently the most absurd bit of legislation has appeared which means you have to get an Energy Performance Certificate (around £100) to show how energy efficient the house is because, obviously the first question any prospective tenant will ask is 'How energy efficient is this house ?" !!!

Good luck with it.

Paul

[Preston]

Hi

If you type "residential letting checklist" into google or another search engine, various agents checklists will come up. Alternatively search the various agents websites; several provide information sheets which outline the basics. The following is a simple extract from one of them:

• Organise 3 valuations from local Estate Agents
  
• Arrange for Gas safety Report to be carried out close to the start date (compulsory every year)
  
• Ensure all upholstered furniture conforms to regulations (compulsory – if they comply, they will be labelled)
  
• Check property for repairs
  
• Check property for obvious safety hazards e.g. internal glass doors
  
• Consider carrying out an electrical inspection (recommended every 5 years)
  
• Decide how to reference tenants (there are various websites to assist, these can be combined with employers and previous landlords references)
  
• Arrange for an inventory to be carried out.
  
• Ensure lender is aware of letting
  
• Ensure building insurers are aware of letting
  
• Inform all the utility companies.
  
• Inform the telephone and cable etc companies.
  
• Make sure you keep a reading of the meters.
  
• Obtain tenancy agreement (various versions free on different websites, including this one)
  
• Ensure key documents are signed by you and tenant on or before first day of tenancy, including tenancy agreement, guarantor form (if applicable) inventory and deposit prescribed information.
  

For what its worth, my advice would be dont try to pull a fast one on your agents. Its always best to start trying to do things properly; that way you can expect others to do the same - and legitimately ask for things to be put right if they dont. On a very practical level, you will also find, once you have been in the business for a few years, that it can be a small world and that from time to time you will bump into agents and landlords you have dealt with in the past and possibly rely on their help, for a reference for example.

Rather than try to avoid paying at all, why not try to negotiate down the fee if you are going to do some of the work they would otherwise have done?

Anyway, good luck.

Preston

[J4L]

Most tenants will try to bypass the agent because it's their way of saving money. This is MAINLY because the agent will charge them an admin fee, or they 'know' the system and they really have something to hide.

On the reverse of this if the tenant is genuine and are not trying to pull a fast one they 'sometimes' fall into the hands of a rogue LL.

I have come across many many LL's who don't really understand what they are doing or not doing and are not keeping themselves up to date with legislation.

Agents on the other hand should be on the ball!!! (and there are those that won't)

Look at the Deposit protection issues, EPC's, changes in Housing Laws, knowing the HB system and it's workings, etc etc etc

I spoke to a LL yesterday (with 12 properties, owned for many years) who had NO IDEA about any of the above, how scary is that?

And here we have a (new) LL trying to save £650 finders fee!! You are already looking for 'ways out' of spending money by trying to convince yourself that because your girlfriend signed the papers that that won't make you responsible for fees. God forbid anything goes wrong with the property and you have to perform minor or even major repairs.

Trust me, If you get it wrong it's going to cost you a whole lot more than this.

Insist on the Tenant going down the agent route, get them to manage for a year and learn the ropes from them.

In the long run you will save so much more time AND money by doing this.

I wait knowingly for your future posts requesting help if you go it alone!

[Trenners]

Hi Geordie,

I totally agree with J4L. If you haven't got any working capital then you should not have gone into BUSINESS as a landlord.

You are already coming across as a total amateur who doesn't like spending money (which in the days of RIGSBY would have made you a typical landlord) but the world has changed for the better!

Let us all hope that your lack of experience does not end up injuring your tenant as, you will soon learn, that:

DEAD TENANTS TEND TO BE VERY LATE WITH THEIR RENT EVERY MONTH.

I can't even bring myself to wish you good luck ..........

Mark

[geordie100]

Yes, i am an amateur, but we all start somewhere,,,,,, right!!

I have access to capital, but maybe not in my front pocket as i am relatively new to this and again, just starting to find my way.

As for killing a tenant, i think that is a little extreme!! Don't you....???

I have all the relevant checks on both gas and electricty up to date, in fact in the last few weeks, so you can't get much safer than that!! I have smoke detectors fitted (Again in the last few weeks) and also a CO2 detector fitted. Appliances are all new and have therefore been factory tested and therefore do not require a PAT test. There are no soft furnishings and anything else applicable are ok from a fire safety perspective...

Just because i am trying to be commercialy aware, by saving £650 (which seems to be money for old rope, to be fair as i am just discovering that everything the agent does i can do myself!!!) does not mean i am a potentially negligant landlord!!!!

Maybe, i should negotiate with them as really all they really need to do is 'find' me a tenant through their advertising network. Which to be fair they have done, so i might go down that route....

Anyway, i still appreciate all advice, even if it is from the doom & gloom perspective.....

[Reg]

I think the main bone of contention here is that you are considering double crossing your agent, by not paying them a finders fee. I'm not ganna advise either way, I think some letting agents do a good job, and yes, it can seem like money for old rope, if things run smoothly. But if problems occur it can be daunting doing it yourself, as i've found out first hand.

I have never used letting agents but would advise to use one on your first let, not just a finder's fee but full management, to suss out how it all works.

Although, Like myself, it sounds like your profit margins are small, so full management would probably not be financial viable.

In which case you could find your own tenant, by placing a free online advert on an applicable website, for instance: www.gumtree.com to quickly test the water. This works for me when i'm looking for prospective tenants (my let house is in SE London).

As your tag name is geordie100 I'm assuming your based in north east, anyway, I've just quickly looked on www.gumtree.com in the newcastle area and there are lots of people currently looking for rented accomodation.

I went straight into landlord management with little knowledge and it was a fairly steep learning kerb, but best of luck

[J4L]

Yes, i am an amateur, but we all start somewhere,,,,,, right!!

I have access to capital, but maybe not in my front pocket as i am relatively new to this and again, just starting to find my way.

As for killing a tenant, i think that is a little extreme!! Don't you....???

I have all the relevant checks on both gas and electricty up to date, in fact in the last few weeks, so you can't get much safer than that!! I have smoke detectors fitted (Again in the last few weeks) and also a CO2 detector fitted. Appliances are all new and have therefore been factory tested and therefore do not require a PAT test. There are no soft furnishings and anything else applicable are ok from a fire safety perspective...

Just because i am trying to be commercialy aware, by saving £650 (which seems to be money for old rope, to be fair as i am just discovering that everything the agent does i can do myself!!!) does not mean i am a potentially negligant landlord!!!!

Maybe, i should negotiate with them as really all they really need to do is 'find' me a tenant through their advertising network. Which to be fair they have done, so i might go down that route....

Anyway, i still appreciate all advice, even if it is from the doom & gloom perspective.....

Hi geordie,

No doom & Gloom here just pure reality.

I do think Marks 'killing a tenant' post is a little over the top but you should never rule anything out.

When an agent does the work for you and is not hassling you every day letting you know what he's doing DOESN'T mean that he's not doing anything, and is getting money for old rope. It's far from it.

I am constantly sorting something out for one property or another, what I don't do is call the LL's every time something happens, or everytime I secure his rent let's say, after chasing the Tenant half way across the county for it.

All the LL is concerned about is that the Tenant looks after the house and the rent is paid.

That's managing it, and to be honest you don't know how yet.

"Just because i am trying to be commercialy aware, by saving £650 (which seems to be money for old rope, to be fair as i am just discovering that everything the agent does i can do myself!!!) does not mean i am a potentially negligant landlord!!!!"

Everything an Agent does, I can do myself!!! - Oops. Good luck with that. Think you just hung yourself out to dry for the sake of £650.

[geordie100]

Well, thanx for all of your support, be it positive or negative...

Well, i decided to go with the agent and pay the £650 finders fee, which i believe is to:

Draw up a contract (Not disimilar to the free one on here i bet)?? (Someones time to add names and address's and printer ink / paper, £35)

Do a credit check (Which i can get for about £30 online)

Chase up references.... (maybe at a cost of £35 for the time and effort)

And i guess the remaining £550 must be to pay for their advertising..... so.... I hope you guys helped me make the right decision.... Can you tell i'm still bitter for kissing goodbye to that money!!!! haha..

As for getting the agent to manage it,,, i actually live 4 doors away from the property so i'm not paying 12% for the tenant to ring the agent, for the agent to ring me and for me to walk 4 doors down the street to sort out a problem.

So, wish me luck!! Maybe i need it!! Maybe i don't! Time will tell no doutbt

[Chestnut]

Dear Geordie,

I do hope your agent isn't reading your comments!

I started by using an agent to find tenants and, having gained some experience, now usually go it alone.

However the local agents I know nearby are always ready to give me advice and are there to fall back on. Finding suitable tenants can become difficult and start to cost money. A small ad repeated in just one local paper over several weeks can quickly run into three figures - I know.

Please treat professionals with respect and they will help you.

[Reg]

www.gumtree.com is FREE and, to date, I have found good tenants when posting online ads. Placing an ad in the local paper in my opinion isn't the best way of marketing your property, besides the costs, you can get all types of weirdos phoning you.

You can't knock geordie for trying to save a few bob and he is now using the letting agent anyway!

[J4L]

www.gumtree.com is FREE and, to date, I have found good tenants when posting online ads. Placing an ad in the local paper in my opinion isn't the best way of marketing your property, besides the costs, you can get all types of weirdos phoning you.

You can't knock geordie for trying to save a few bob and he is now using the letting agent anyway!

My advise was to let the agent manage this for a year and thus I'm sure your costs would have been much less than what you've paid. Surely they weren't going to charge you £650 and THEN 12% pcm?? That's way too much in my book.

You'll probably find that the set up fee may have been much less and the monthly percentage wouldn't add much if anything into what you've already paid.

Anyway I'm sure you did the figures before going for that option.

I do love Landlords who say things like "As for getting the agent to manage it,,, i actually live 4 doors away from the property so i'm not paying 12% for the tenant to ring the agent, for the agent to ring me and for me to walk 4 doors down the street to sort out a problem."

You have no idea yet as to what can go wrong so you asked for good luck wishes, let's hope you don't need them. Trust me there are some superb tenants out there, let's just hope you have one of them because you'll need more than luck on your side and you'll be walking a lot further than 4 doors away to sort certain things out.

[geordie100]

I charge £550 rent pcm so... The finders fee is 1 months rent +vat hence £650 Is this not normal?????? Please tell me if it isn't!!!

And the management fee is a seperate issue at 12%

I thought this was standard practice....?????

[J4L]

Hi geordie

I think you have to look at the local market to see what is standard or not.

I personally don't charge a LL a 'finders fee' if they sign in for a management contract and the LL only pays the monthly charge. There is a set up fee of £100 but it's a one off fee that doesn't get charged again regardless of how many tenants we put in.

A lot of agents do charge this and I find it hilarious that they do and get away with it.

Shop around next time.

[Mortitia]

Hi Geordie,

You might like to try and do a deal on the 12% next time as I know you have already signed up.

I noticed yesterday that 3 of my local letting agents (Bournemouth) have dropped their commissions to 8% and one to 10% from a massive 15%. And one of the 8% said that was negotiable! There is plenty of competition and times are hard. Be cheeky next time and barter a rate if you haven't learned enough from here to do the whole thing yourself.

Good Luck,

Mortitia

[plym77]

completely off topic, but do remember that you have tax obligations for this property.

If you do not already prepare a tax return then you will need to the the tax office know by 5 October following the end of the tax year in which you started your rental business. You will then need to report your profits annual (to 5 April each year) and submit a tax return by the deadline 31 October (or 31 January if online) following the end of the tax year. If you are making profits you may not only have to pay tax, you may also have to make payments on account towards the following tax year, depending on the figures - this is more of a cashflow issue, but can mean paying double what you are expecting initially.

You and your partner (married or not) may like to consider the position regarding profit equalisation if one of you is a higher rate taxpayer and the other not. Also, ensure you are maximising your loan interest potential.

If you require any assistance with your tax returns or advice, then feel free to email me.

In the meantime, I hope this helps

Regards

Sherena

[Guest trebor69trebor]

My advise was to let the agent manage this for a year and thus I'm sure your costs would have been much less than what you've paid. Surely they weren't going to charge you £650 and THEN 12% pcm?? That's way too much in my book.

You'll probably find that the set up fee may have been much less and the monthly percentage wouldn't add much if anything into what you've already paid.

Anyway I'm sure you did the figures before going for that option.

I do love Landlords who say things like "As for getting the agent to manage it,,, i actually live 4 doors away from the property so i'm not paying 12% for the tenant to ring the agent, for the agent to ring me and for me to walk 4 doors down the street to sort out a problem."

You have no idea yet as to what can go wrong so you asked for good luck wishes, let's hope you don't need them. Trust me there are some superb tenants out there, let's just hope you have one of them because you'll need more than luck on your side and you'll be walking a lot further than 4 doors away to sort certain things out.

georde has no property just wasting peoples time

[geordie100]

georde has no property just wasting peoples time

????? What are you on about ?????

Why would you write this??? fool!!!