The Story of a Wannabe Landlord
The blog is back and from now on in subject’s tackled are all suggestions by the readers. Therefore thanks to Dan & Helen on Facebook for inspiring the subject matter in this one. Before I get into it – this is just my personal experience and this is not advice one way or the other. You’re all grown ups – make your own damn minds up.
2007
The property market was rollicking along. Prices rocketing, rental yields surging, mortgages being dished out at 125% of the value of the property and there was no end in sight. The sun was shining and hay was being made. I wanted a piece. With the help of my wonderful parents I swanned around Hyde Park in Leeds and bought the first house I saw. A 4 bed back to back terrace in the middle of studentville. Perfect. It’ll rent year after year, I’ll build up a huge portfolio and I’ll be on a yacht in the Caribbean in no time.
2008
Bugger. The property market has crashed. It’s wiped about 40k off the value of my property. Joyous. My old man keeps telling me “It’s a paper loss son; just hang onto it it’ll come back around”.
2009
As Australia’s batsman crumbled against England’s pace attack in the Ashes – the roof joined in. That was fun. Swashes of rainwater flowing through the upstairs like the Nile. £5k to repair. Lovely.
2010
I was in a pub about 8 pints and 2 strawpedos deep when I get a call from the police saying the property had been burgled. I realise I’m but half a mile from the property. I sprint round there. When I turn up half cut it takes me 10 minutes to convince the police that a stumbling and mumbling 24 year old is the landlord. Door has been kicked clean off it’s hinges and ruined. £750 to fix. (not my finest hour that).
2011
One tenant decides to up like Forrest Gump and do a runner. Gave up tracking him down in the end. Despite the fact his parents were guarantors they were also impossible to get hold of. Lost rent of £2k.
2012
OH IT WAS GLORIOUS! NOTHING HAPPENED! I collected rent and happy days.
2013
I had a void period of 6 months. The market became uber competitive and students demanded higher standards which I didn’t live up to. Total refurb required. Another 5k.
2014
UNEVENTFUL!
2015
Mould downstairs, roof is leaking again upstairs and the house smells of a certain type of illegal grass.
2016
So this is where we are today. I’ve had enough.
The market has picked back up and the valuation level is around 2007 again so it’s on the market.
I’ve disliked pretty much every second of being a landlord. Sure you can pay someone to look after your property but they take a fair whack of the rent (10-12% in my experience). The phone calls late at night like a jilted ex, the hassle much like a jilted ex, it just isn’t worth it in my opinion (like a jilted ex). There are also some significant headwinds to bear in mind (like a jil….ok I’ll stop now);
Stamp Duty Increase – As of April 1st 2016, there will be an additional 3% stamp duty to pay on a second home. OUCH.
Taxation – Wear and tear allowance is going. Mortgage interest being added back to rental profit and taxed more heavily right up to its peak at 2021.
There’s so much to think about before diving into starting a buy-to-let portfolio. The main point is though – how does it fit into your overall plan? Is this something you’d love doing or do you see it as a retirement strategy? If so – have you explored other strategies? Please don’t make the mistake I did and rush into it – create a proper plan and see if it can help you get to where you want to be. Feel free to chat to me about it.
Cheers all.
Roh
PS – This is OBVIOUSLY just my personal opinion and I understand many will differ. We’re all different and that’s what makes us wonderful. YOUR HOUSE MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
PPS – AWWWW diddums. Your second property didn’t go to plan? I feel for you. (I expect reactions like this)