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Hi guys, I just met the 'HMO guy' and he told me something interesting. Because im under 25 its hard (not impossible) but hard to get buy to let mortgages. He suggested a way to get properties for free with no deposit bya) contacting landlords of single lets through advertisementsthenb) telling them id like to rent the place for a long term e.g. 4 years.and sign the contract.c) I will then rent the house out by a room by room basis (not single let) and gain more this way. I wont be doing illegal sub letting. I will tell the landlord this is what Ill do.He suggests that this will work as a lot of landlords are off put by HMOS so wouldn't do it themselves and would be happy with my guaranteed rent. I would gain a little extra stress granted but could be worth it?
Make sure you inform the lender too and watch the plan fall apart!Sorry but there's not much 'for free'!Lisa
Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com
And not to mention the number of your "average L's" pulling out once they hear your plan and don't fully understand the concept of sub lettings.
And the minute you mention "guaranteed rents" be prepared for indemnities and warranties.
Sorry but personally don't see this as much viable.
Iggy,Try it and see how it goes.One guy I know does this but not the 4 year bit. He has over 50 doors across a handful of buildings. Everyone knows and it is all above board. The landlords just like having one person rent the place.I have the impression, to be verified, that the building owners do not have loans secured by the property so no conflict with a lender.John CoreyFollow me on Twitter-> https://www.twitter.com/john_coreyhttps://www.ChelseaPrivateEquity.com/blogLondon RE meeting, 2nd Tuesday of the month -> meetup.com/real-estate-advice
I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.
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Hmm - A kind of mini letting agent - Yes its a good idea - its just being creative and good luck.As long as you comply with who and what you need to and as long as everyone knows the score then it can work well.People will work for people where there are the right incentives in place. This can be cash / accommodation / exchange of skills or favours .We all do it at various levels in some guise or other. This is no different.That is how the world ticks along.......Me......I will give you a lift to the HB office in town if you sort out my dodgy windscreen wipers for me...... Tenant - wicked its a deal mate....... We are both now sorted. I`ve got a car, he hasn`t. I dont know one end of a wiper blade from the other, he does . Problem solved - Result - Yes this is just like having a mini letting agent on your doorstep and compliance will be more likely. Its creative productive hands on close management and all parties could gain. It will succeed or fail depending on your own skill. Try it. That's whats being entreprenurial is all about. If you fall just dust your self down have a think tweak your ideas and get up and start again.I`ve got a particular estate where I invest in quite heavily and have a mini sub team of tenants who act as informal internal monitors.They are a form of letting agents between them . It helps with maintenance/ rent collection/keeping the peace/ filling voids etc I get the heads up on whats happening in the community. It can save me lots of time/ money / energy. Its good for them and good for me.Go for it Iggy and come back and tell us how you get on.
Jonathan Clarke. http://www.buytoletmk.com
As John Corey said if there's no mortgage and you comply with the relevant legislation then it may work.Funnily enough I know someone who says they do lots of these and says publicly they only do them on properties with no mortgages but privately admits they're virtually all mortgaged they just don't tell the lenders and take a chance!Lisa
isnt that exactly what Ben Leppier teaches?
This is similar to doing lease options but without the option bit!You're leasing properties from LLs, like Housing Associations and even some Councils do, which can be attractive to LLs not wanting to sell.I think the tricky bit would be getting LLs to have complete trust that you would run the properties well and hand them back in the same condition. Obviously, you need to be fully confident of that too and probably have suitable insurances in place.Kim who comes on PT does the same, leasing from LLs and running as HMOs. He had an article about it in a recent edition of YPN magazine.Good luck with it Iggy!Angela
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You also need to comply with HMO regulations and might need planning permission for 'change of use' from C3 to C4.
But as mentioned above, it can be done.
I'd be very interested to read that article. Do you know which issue of the magazine it was?Also, you mention that Iggy might need to consider the right insurances.I am in the process of building a business on a similar model, although we own our own properties and currently manage one for a landlord. I spoke to an insurance broker yesterday, and he seemed to think that as long as there was no cooking equipment or portable heaters in individual rooms, that a standard landlords insurance, with a note explaining the living set up in the property would be straight forward.Is there another aspect of insurance I should be considering do you think?thanks Angela Bryant said:
This is similar to doing lease options but without the option bit!
You're leasing properties from LLs, like Housing Associations and even some Councils do, which can be attractive to LLs not wanting to sell.
I think the tricky bit would be getting LLs to have complete trust that you would run the properties well and hand them back in the same condition. Obviously, you need to be fully confident of that too and probably have suitable insurances in place.
Kim who comes on PT does the same, leasing from LLs and running as HMOs. He had an article about it in a recent edition of YPN magazine.
Good luck with it Iggy!Angela
Hey this can definitely work provided that you have the landlord onside and you have enough margin in the deal to make it work.I buy, sell and manage HMO's (in the broadest sense) most of the properties we now do are on 2 levels with 4 tenants avoiding some of the onerous requirements of compulsory licensing. I would advise that you too do not stray into the area of mandatory licencable HMO's.I would not worry too much about lender permission if you are not subject to mandatory licencing. The lending permission is not your problem as such. I have never ever heard of a lender causing grief to someone who has converted a house into an HMO without lender permission. I have yet to come across anyone who has had problems with a lender for letting their property out when it was not purchased on a BTL basis when they have paid the mortgage.The approach i would take would be to work out your realistic profit margin. Ensure that you make enough to be able to return the property to the lessor in reasonable order. Then look for a long lease circa 5 years.The management required is intensive. Do not think of this as easy money.