ASK529: Have I made a big mistake? PLUS: Can this help me with Renters' Rights?

0:02Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Hey everyone, it's Ask Rob and Rob, the show where you get your questions in, predominantly property related. Sometimes you go a little off piece, but we don't mind that. And we do our very, very best to give you a good answer in return. We've done this over 500 times now, so we're well versed. But luckily, you always have a lot of questions. And we'll guide you now to the place you can go to ask some more. Yep, it's just one destination, propertyhub.net slash ask. If you go there, you can leave us a question in written form for our Sunday Times column, or you can get yourself on the show and be the envy of all your friends by leaving us a voice note.

0:43Rob B:Okay, let's listen to our first question in from Dan. Hi, Rob and Rob. My name is Dan. Thanks for all the great content over the years. I hope you can help me with my situation. I'm in a bit of a quandary. I've been doing this for a number of years. I'm a relatively experienced landlord and I have a small portfolio. most of them are in my own name because of legacy really but the most recent one I bought is in a limited company and this was the one that was supposed to be the easiest I'd done all the research I bought in a great city a city that you guys have championed brand new great developer I have no issue with the build quality that's all really good where it's become difficult is that since I made the purchase, the competition on the particular development for rentals has increased significantly, which has put downward pressure on achievable rent.

1:36And the achievable rent is nowhere near what I thought it was at the point when I purchased the property. And it's now proving actually quite difficult to rent it out. I do have options, fortunately. It's currently not rented. I could put it on the sales market, but I may not achieve what I paid for it i did get a discount by the way again i thought i was doing the right thing did get a discount i think i should have pushed harder for a better discount but you live and learn um so yeah i could put it on the sales market try and sell it but i may not get what i paid for it i could significantly lower the rent and see if i can rent it that way which would be a shame um it would certainly decrease my cash flow obviously that would be unfortunate i'm even thinking short-term let's market or different type of let's market obviously whatever you might or might not be allowed to do in that a different approach to letting it serviced accommodation or whatever if you're allowed to do that I don't know so that's another option or the other option is I am in a fortunate position that I could pay down the vast majority of the mortgage which would mean at least it's not a cost burden as much every month I know that's not good use of that money because of ROI, etc.

2:46But I am in a bit of a quandary with this. This is the one that I said I did the most research. I thought I'd done everything right. And this is the one that's caused me far more headaches and stress than any other property that I've ever bought. So I'm hoping you might be able to offer me some advice and sort of tell me whether I've just made an enormous mistake.

3:05Rob B:Thanks. Yes, Dan, you made a massive mistake. Next question. No, don't worry Dan relax take a deep breath you're fine honestly you're fine this happens fairly regularly for a couple of different reasons so one you've got a new build and when you have a lot of stock come onto the market there's a temporary window where there's more competition than normal and that's normal that's expected so you may have found that you had to reduce your rent slightly on your first let to get it let. But you're not doing this investment for the short term. You're doing it for the long term. And the best time to judge this is in a few years time.

3:43Rob B:Because of course new stocks coming onto the market all the time. But demand's going up and you've not named the city. But I imagine that if it's a city we've championed, it's a great city, that it's going to be a place that people want to live and continue to move to. I've seen this happen so many times with my own properties where I've assessed the market rents, done my research, and it comes in sometimes a little shy of it. By the way, sometimes it's been in excess of it as well, but we're talking about the downsides here, the situation you're in. And when that happens, I just relax because I know that when I've done my research, that I know this market area normally achieves a certain level and normality will return.

4:26Rob B:It's just that you've got this temporary spike. think about it let's say there was 200 apartments that came to the rental market at once which is a lot it sounds like a lot and it because it is a bill to rent provider so that the people who build these blocks and then let them out privately would often take up to six months to let them all out and they would take that amount of time so you wouldn't let it in weeks so you would need to accept that lower the market rent sometimes as i say sometimes you'll be pleasantly surprised because the demand is just so strong but sometimes except that smaller amount but what you will find is that in a few years time this is something I can definitely share my experience of you'll find that it goes up and often then more than your original estimates so I see this as a temporary window something else to be aware of as well is some cities have seasonality when it comes to getting a property let.

5:26Rob B:So again, I don't know the city and I don't know exactly when you first try to get this property let, but Manchester, they have windows where it's boomtown, that properties are just flying off the shelves for rental because of students. And international students in particular love the newer stuff. So you're in a great place there. Speak to your letting agent, whichever city you're in, because I don't know if it's Manchester, and ask them, Do these seasons exist? If they're even slightly good at their job, they'll be able to answer that. And perhaps you might be lucky enough that it lands within that season, or somehow you can engineer the timing for it to happen, that you go and get your next tenancy during that window.

6:06Rob B:But overall, Dan, I would not go to some of the more dramatic solutions you've laid out here. I wouldn't change strategy. I wouldn't try and pay the mulch down dramatically. I wouldn't sell it. that's just going to cost you money. Judge this property in, well, ideally 10 years time, but five years, but even just judge the rental in two. Don't go short term. This isn't like investing in stocks and shares. It's not about rapid movements in price, either for or against you. This is about taking a longer term view and assessing it then. I very much doubt that with the amount of thought that you've put into this and the research that you've put in, that you've made a bad decision it just may be that your forecasts are slightly under to begin with but i'm sure we'll be above at some point in the not too distant future best of luck great answer let's see who can help out next hi rob i have bought a copy of your how to be a landlord and then subsequently when you updated it i bought a second copy and i've recommended it to a lot of different people how to be a landlord and use it as a reference guide now the renters rights Act has come in.

7:17I wondered if you could tell me when you'll be creating an updated copy to incorporate all the new rules and regulations. It would be very much appreciated and I will continue to recommend it out to people. Thank you very much. My name's Holly, by the way. Holly, thank you for your question. And I promise this is a real question. I have not put someone up to this just to promote the book. But I figured if you're asking the question, then other people will be wondering the same thing so it's worth answering which is that i've done it already it's out there it's not just an update it's a whole new second edition so if you go to amazon and you search for how to be a landlord you will see the second edition on there at the top of that listing it says updated for the renters rights act it has been completely updated for the renters rights act and i was very glad to do it because for the last few annual updates of the previous edition i was having to say well at some point this is going to change we don't know quite what it's going to be like.

8:08This time, finally, I can say definitively, this is now how things are. So in exactly the same step-by-step format as before, it takes you through setting up a property, getting your first tenants in, what happens along the way, what happens at the end, what happens if things don't go quite so well. All of that is completely updated, including the new tenancy type, including how you increase the rent, including what you need to do about pets, and most importantly, what you need to do if something goes wrong. So Holly, I trust you'll be rushing over to amazon to pick up your copy and thank you so much for reading the book in the

8:38Rob B:first place but also for your question so that's just done for another week thank you for listening we'll be back with the main event the property podcast on Thursday until then take care have fun bye-bye