I Want Out! – Ideas and Opinions Welcome

Drew - have you considered not using an agency and sourcing your own tenants? Agents will never take the same degree of care as you will when it comes to choosing tenants. For them, the loss arising from a dud tenant is small; to you it is huge. So your incentive to find a suitable and low risk tenant is much greater than theirs. I had a multi-occupancy property in a Norfolk town which I sold last year. I always got my tenants direct by advertising on Gumtree and Spareroom. com. By careful weeding out of likely non-payers, I was able to achieve an arrears level over my 10 years of ownership of only about 5%. I generally found that the tenants most likely to get into difficulty were the very young people i.e. 19 -22. The best payers were in their late 20's/early 30's and it then dropped amongst anyone over 45. All sounds very ageist I know, but the correlation between age and tenant reliability was remarkable.

Another possible option is to see if a local housing association or the local authority in your area will offer a guaranteed rent scheme. Basically, they take over your property for 3 or 5 years and pay you rent directly and then they source tenants themselves from the local authority waiting list. I did it once on a flat in London and it worked well, but the flat was in need of some serious refurbishment at the end of the tenancy. If you're lucky and the local authority put a nice family in there who treat the place like home and stay for several years, it could work well. Of course the rent will be lower, but you will always get paid as your lease is with the local authority.

As regards auctions, I did consider that for my Norfolk property but in the end was able to sell it through an agency. The auction company will encourage you to set a low reserve price on it which can be scary. The fees can also be high. But if you are very lucky, you might get a good price if several bidders are competing on it. Look at auction companies recent results and see if they have sold anything recently which looks a bit like your houses and how much they got for it. If other similar stuff has been proven to sell at auction for a decent price, it may be worth a shout. Having said that, post- Brexit, people will probably want bigger discounts, so selling up is perhaps a last resort.

Drew – is the economy tanking? There's a lot of talk, but little sign yet of falls in house prices. But perhaps Doncaster has specific local problems and confidence has been hit hard by the Brexit vote.

I would be inclined to take on self-management as Simon suggests – it will save you money and bring you to a closer understanding of your tenants. Arguably if your salaried income has fallen, then having letting agents is a luxury you can no longer afford. If your letting agent is that relatively rare species, a genuine specialist in HMOs, then have a frank talk with them about the quality of their recent supply of tenants and how they propose to improve this, otherwise they are at risk of losing your business.

Alternatively you could switch one house to self-management and use Gumtree and Spareroom, and perhaps Accommodation for Students, to see how that works out, whilst keeping the other two houses with the agents.

Also, have you considered taking out rental insurance (Rentguard etc)? Provided the tenants pass a credit check when they are first chosen, you can insure yourself against loss of rent and have some protection against these sudden fluctuations in your net rental income.

Hi
I'd agree with the other comments on here about taking back control of your properties. Many letting agents simply don't understand the HMO market and what those people want. Ive had plenty of bad experiences of HMO's like yourself and have learned the hard way as many of us do.
South Yorkshire also seems to bring its own set of problems (I've had these as well!)
There are plenty of portals specifically set up for room shares. Ive found these to be great - Easy Room Mate being the best for me. GumTree is also very good.
Are your room sharers working or DSS?
There are plenty of advantages and disadvantages to leasing your property to an agent or other, i'd be careful here but i do have some contacts who do this kind of thing and i also work with a number of charities and LA's that also lease entire homes.
If you want to message me directly then please feel free. If not then i really hope things work out for you

Regards

Adrian

HMO Man – what do you like specifically about Easyroommate? I've never tried it as I've always had success with Spareroom and occasional use of noticeboards at the local university or major employers and hospitals. Rightmove was hopeless: people seemed incapable of reading the advert and kept ringing me thinking I was offering an ultra-cheap one-bed flat! Gumtree has in my experience a much higher proportion of flakes compared with Spareroom: they don't come to appointments, they're actually on ultra-part-time work and benefits despite claiming they are "professional", they make silly offers on the rent and want to move in their pet Doberman, and so on.

I agree the vast majority of letting agents don't understand HMOs, and many refuse to take on houseshares because the work involved is too small for the returns.

Hi Tony

Easy Room Mate £199 - advertise as many HMO's as you like and easy response to all queries.
Good search and marketing functions. Pretty simple to use overall and much cheaper than Spare Room.

Also for DSS sharers (if you have any) try DSS Move

Regards

Adrian

In the first instance before doing anything rash or final, what I would try is to start 'managing' your managing agent.

Keep in very close contact with your current agent. Set them guidelines on the type of tenant you will accept and insist that they pass the tenants application/information to you along with a verbal description of the tenants position and their impressions, then you okay, or kibosh letting to the tenant. If they sound like they will be trouble tell them don't even bother reference checking them, just say no!

Consider a slight rent reduction to attract more applicants, it is better to earn slightly less over the course of the year and maintain high occupancy as you will end up better off overall.

Insist on a reference checked guarantor for low income, housing benefit or under 25 year old tenants.

Meet the applicants at the agents and carry out visits to the property periodically and speak with the tenants you see when you're there (you don't have to do a full inspection, just look around the common areas and be seen), this will give tenants an opportunity to let you know of any problem tenants. Often times good tenants will simply move on rather than complain (particularly in HMOs). One nuisance tenant can empty a building in no time (ie dealing drugs).

You will need to consider the demographic of tenant you can reasonably expect in your area and the price bracket, but try and get the best you can in that demographic.

Doing all the above will give you a chance to
a) learn the ropes and see whether you feel confident to go it alone
b) give you a good feel for where any problems may lie (is it with the managing agents, or the property, or the tenant selection?) and how to fix them.
c) compromise on full management on your own (when you may not have the time), yet keeping yourself an active participant in the management of your properties.

if you find this works for you, you could use your agent (as we do) on an introduction only basis and manage the tenancies thereafter yourself. As long as you give clear guidance on the type of tenants you will accept. We have negotiated a very good rate with the agent we use.

You need to actively be involved in the management of your own business. An agent will never give the same amount of care and attention to the details as you will yourself. After all it's your livelihood.

Hi Drew

Sounds like you got a touch of the Brexit Blues . I had it for 48hrs as well but well on the mend now. We are in for a bumpy ride but you got into property investment for a reason and in 20 years those reasons will become clear when your properties have all doubled in value and due to rents rising your positive cash flow will be looking very healthy . So hang on in there and deal with this short term blip
I would be inclined to take your first option -

Do nothing but get in the face of your letting agents and let them know you are in pain.
They don`t want to lose you so its down to them to up their game. As Kate says - manage your managing agent
Ensure your file is at the top of their in tray.

Others have suggested self management . You didn't put self managing down as an option so I`m guessing you don`t really want that and have already ruled that out . I self manage my own portfolio but undestand its not for everyone. My clients want me to manage because they dont want to. They have thought these things through already. I could go on a plumbing course and save myself money but i can earn more elsewhere and i don`t want to spend my time rummaging around the back of a smelly sink to save me £50. Its just not for me. But I agree it is an option

The answer will come from you ultimately so maybe do what i do and talk out aloud to yourself in the mirror and answer yourself back. Its amazing what spills out of your brain sometimes when you do this . Express your hopes and fears, explore the pros and cons verbally using expletives if you like to relieve the stress built up. Make sure the house is empty though as others erm may not understand. I do it when facing big decisions and it often helps me to clarify what i really want sometimes in life

Good Luck

Jonathan

Reply to the comment left by "Simon Williams" at "12/07/2016 - 10:53":

Hi Simon, thanks for the reply. I don't have time to source my own tenants, unfortunately. Your suggestion about the local housing associations sounds interesting though, so I'll have a look into that. At the very least, I should find out whether it's an option or not and then I can make a proper decision about it.

Reply to the comment left by "Tony Atkins" at "12/07/2016 - 12:47":

Tony, yes, you're right about the economy not strictly tanking. It's not like things are going bad right now, but property prices in South Yorks haven't really gone anywhere for several years, and there's a huge population of EU workers who form a large part of the tenants in the area, so it's just not a particularly attractive area to be a landlord in.

Before I say "I haven't the time" to be a landlord, do you have any estimate in how much time would be needed to let and support the properties without an agency? There are 11 rooms over three properties, all in the central Doncaster area, and I'm about an hour's drive away. My gut feeling is I'd rather get out of the landlord business than take on direct letting myself, but I shouldn't be making decisions based on gut feelings!

Reply to the comment left by "HMO Man" at "12/07/2016 - 13:13":

Hi Adrian, thanks for your reply. The tenants are workers, not DSS. I've asked the same in response to Tony, above, but do you have an estimate in how much time would be required to do direct letting? 11 rooms over three properties in central Doncaster.

If I do decide to go down the route of housing associations or similar, I'll get in touch.
Cheers.