As some of you may remember, I bought a property in February to develop into flats.
My previous blog took you to completion, this is the continuation of the project.
The property was a 5 bed detached house with a 1 bed single storey annex attached on a great corner plot. We We able to negotiate a 2 week delay between exchange and completion so we could get a head start on the very sparse refurbishment on both parts of the property.
By the time we completed on 19th February the Annex was finished. Some of the house was started, but would need another 2/3 weeks to get that ready for letting out.
The priority was to get tenants in as quick as possible. We need to add funds to the pot to cover the mortgage as well as planning fees and associated costs. We used Open Rent as 3 company Directors are local so we could manage the process ourselves. We put the property on before completion to minimise the time the property would sit empty; it really worked as the annex tenants moved in on the Sunday after completion – we also rented them the garage, so £850 per month on a standard AST.
The main house was a problem though as the drive was in front of the garage so has no parking at all. Again, we advertised on Open Rent, but although we had plenty of interest at both £1500 and £1750 pm none of them passed the references. That causes problems for our insurance so we couldn’t proceed.
Then a lady whose house had burnt down a few weeks earlier approached us. She was currently staying in a hotel with their 2 children and sick mother, which was not ideal. She had been asked by her insurance company to fins somewhere for 3-6 months while her home was renovated. We pursued this, and were particularly interested as under COVID rules tenants can be difficult to move on. This could potentially cause delays when we are ready to start the development so a tenant with a clear exit route was a winner.
We got in contact with the insurance company and negotiated a fully furnished price BUT that obviously meant it needed to be fully furnished – we only had 4 days (including a weekend)! The rent offered was £3650 per month for a minimum of 3 months. Ideally we need more than 3 months, but it was important not to lose sight of the development prize and we were aware of the clear benefits this provided. Any income towards the costs and mortgage are a bonus. We have a mortgage with no ERCs so as soon as planning is approved and the tenants have moved out we can get on with the next stage.
My vlog, previously published, gives a bit more excitement than the written word – that said it was a manic few days. The tenant was a dream as she really wanted as much upcycled goods as possible. I gained a lot of trust from how she dealt with the situation; we gave her a £200 budget for all bedding, kitchen utensils and soft stuff – she came in at £235. Total spend, including 4 new mattresses, was £2168.
They moved in on the Monday evening. As the monthly amount was under a serviced standard price, we insisted on 3 months up front; as they are totally incompetent, they tenant moved out of their hotel by 10am and the payment came through at 5.30pm. I can’t think of anything so stressful for the family . The whole process wouldn’t have been achieved without the 4 Directors working so well together, and this really has shown me that I am business with a great group of people.
Food for thought…. Loss adjustors are always in need of accommodation. As long as your mortgage provider is happy, it can be a lucrative income. It would be worth finding contacts in the areas you invest to see if the timing works. It is important to check the figures though, they want fully furnished and bills included, so it may not be worth it over a year’s contract.
Your partnership, work ethic and values are key to a profitable and stress free working partnership. Everyone will have something to bring to the party and it is important to be mindful of that. All of us have busy full time jobs, so effective and smart working is paramount.
The last few days of this property were genuinely hard work. I was able to build up such an open relationship with the tenant and found out she was a very community based person. My close friend had lost her Mum days before they were due to move and whilst helping her pack (on the Saturday before the tenant moved in), I noticed a lot of disability equipment that was no longer needed. I spoke with the tenant and she was able to give all of it to her local elderly charity, which they desperately needed. So a really positive end to it all.
A bit of excitement for the closing straights of lockdown. Now to get the planning in next week and I will update you on that as we progress.
Enjoy your weekend.
