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What do you need to know about care provider leases for HMOs?

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They used to be an issue with lenders but we now have many options!

So what do you need to watch out for?

Experience

The preconception is often that you need plenty of experience in this sector but that is not the case!

You only need to have had one BTL for one year to be eligible for an HMO with a care provider lease in place.

Type of property

Each care provider needs a specific type of property, whether it is the number of bedrooms, amount of communal space, etc. It’s a balance between making sure that it is not so bespoke you can’t do anything with it if this doesn’t work out without spending further money if for any reason it doesn’t go through.

Area

Again, this will be dictated by the type of tenants. Location is so important to your care provider, so make sure you find this out before you start sourcing your property. Distance to local amenities, transport links, and particular things that need to be close (or not!) are vital to your provider.

The Lease

Ask for a copy of one of the care providers’ draft leases in advance. Lenders will need to approve them, so it is important that you give us a copy of this to get it approved, in principle, before the transaction starts. A recent case needed some amendments which the care provider agreed to, but this may not always be the case. This is really important as the fund is dependent on it.

What are the benefits?

  • Less uncertainty of tenant turnover.
  • No void periods or non-payment.
  • The contract usually includes all bills.
  • No referencing or upfront costs.
  • Property is handed back as you left it.

 

Reasons To Change Agents

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Reasons for not changing your agent…… and why you should!

Hi everyone, yes, it’s Friday again already! I hope you’ve had a chance to enjoy a bevvy in the sun.

I think this lockdown has allowed a number of us to reflect on our current situations, and perhaps make overdue necessary changes.

I was talking to some like-minded individuals a while ago about my portfolio; it all started because I disagreed with the term “passive income” from a property portfolio. We all need to put the time in to build and manage our properties, but effective time.  We have 8 properties between myself and my partner, so not too many to manage.  And so the conversation started…

Mid-2017 I had had enough of my current lettings agent. Even though it was full management it required so much of my time to address things that weren’t being chased or dealt with by them.  I just had to change, I and my partner kept talking about it but there was always something that kicked it down the road.  As we have student lets, we always seem to be near the time for a changeover, so left it. When we finally made the decision to do something about I got diagnosed with breast cancer, which was early 2018, so there was no chance, but it also made dealing with them even harder and exhausting – and it was all my fault.  My excuses were always that it may not be better, wrong time and the old favourite of better the devil you know!

I had always had a good relationship with one of the guys working for the agent, but he’d left a while before.  I asked him, Manny, to keep my number….

September 2018. It could not have been a worse year, my Dad was also very poorly and we had taken a well-earned holiday in Sicily. I got a call from Manny asking if any of my properties were empty.  Two were (they were student lets at the time).  A couple of phone calls back and forth and some e-signatures later and both properties were rented out before I even got home.  Perhaps circumstances pushed me over the edge, but I have never looked back.

The new agent (Prominence Estates) are outstanding. They have given me my time back, and less pain at home!

But why do we procrastinate on important decisions that involve change?

I actually think it is a form of laziness, which comes in a variety of guises – comfort zone, poor excuses and just haven’t got the heart as a few examples. My friends and colleagues would not think I was lazy in the traditional sense, but I really couldn’t be bothered with the effort of that change, yet I was really struggling with the system I had.

All parts of the property business need good, decisive decisions.  Where a lot of us have full-time jobs time is our most precious commodity and should really be looked after.  Taking change head-on is important.

I have learnt from what happened and now focus on my power team.

Reflection on your properties and your power team is so important. Look to see what areas are too time-consuming (we obviously have to do some work) and consider other more efficient options.  Each one of the team has to count – estate/letting agents, solicitors, and brokers. You are paying for all their services, both time and cash. We often sacrifice cost for our time and therefore seriously underestimate our value of ourselves.

Check out recommendations, good service floats above the rest and poor service can’t hide for long. Listen to your gut! I ignored mine but thankfully Manny called me – the rest is history.

A good relationship should not be that hard, it really shouldn’t.

Enjoy your weekend everyone.