How to reorganise? Where to start?

[Toastnotboast]

All opinions, guidance, wisdom and perspectives are welcome.

Here goes…….

Partner: 55, engineering contractor, currently between contracts which are not as forthcoming as they were, so he’s out of work. And still has to service everything obviously.

Has: Overseas flat let as a holiday let, no mortgage, it lets out solid in summer then nothing and brings in about £10k a year.

House 1 in UK, on long term rental, value about £300, owes £130k, rental income is £1k a month net

House 2, UK, worth about £850k, owes £280k, currently holiday let, bringing in about £3k a month over the 4 summer months (when he moves in with me)

Flat, UK, currently used as storage and is unfinished. On same plot as the main house.

Assumptions:

Overseas flat will always rent out for 4 months in summer

House 2 will let out sporadically but big money when it does (projected occupancy is about 40% over the year)

House 1 tenants are staying put.

No cash savings, small pension.

When actually in work, it’s fairly well paid but competitive. £70k a year is about right.

He needs about £3k a month to stand still, including paying maintenance to ex etc.

How would you advise, assuming that paid employment is not forthcoming any time soon.

Thanks tons if you’ve got this far.

House 1 in UK, on long term rental, value about £300, owes £130k, rental income is £1k a month net

= £12,000 per year

House 2, UK, worth about £850k, owes £280k, currently holiday let, bringing in about £3k a month over the 4 summer months (when he moves in with me)

= £12,000 per year

=£24,000 income

He needs about £3k a month to stand still, including paying maintenance to ex etc.

= £36,000 outgoings

So he’s £12,000 per year short of his obligations, or £1,000 per month.

He could get a stop-gap job doing something unskilled?

Or he could sell the big house?

Finish the U.K. flat and rent it out?

Work on marketing overseas flat so it rents out for more time than just the summer season? If it's making 10k per year then decent rental return should be 6 per cent - did he buy it for 60k or so?

Alternatively, downsize house 2 (bad market to sell in) and put the money in a account paying 6 per cent which reduces outgoings.

thanks - not got the cash to finish the UK flat

By my fag packet calculation he’s not that short cos of the income from overseas flat

but as a plan, finish UK flat and rent it out (or live in it) seems logical.

how to raise cash to do it (estimate £20k)

Ah yes, missed that.

So is it in fact mainly a cash flow issue? Because he could surely make the extra needed if he got a stopgap temp job whilst looking for contract work?

Ok, so he is in fact 2k short on the year?

Can he work on getting the properties (over seas and House 2 let over Christmas/New Year period?

Yes I suppose it is cash flow - because if he could put his hand on enough to finish the flat, then he could rent that out or at least have somewhere to live.

Yes we could throw everything behind that too. If only we had a clue where to start…
Lots of googling to be done.

Depending on what exactly is needed to finish the flat it could even be worth short-term borrowing to get the money to finish it.

I’m thinking that too. Lots of issues solve themselves if that was done. And in % terms it’s not a huge increase in his exposure

Overseas flat will always rent out for 4 months in summer

How can you utilise the 8 empty months?

House 2 will let out sporadically but big money when it does (projected occupancy is about 40% over the year)

Again how can you increase the occupancy? Would it be better to rent to tenants? To see the properties and buy alternative cheaper places that have 90% occupancy? Cheaper rental price in the barren months to gain some income from 15 months of unoccupied properties?

Both properties would make more money in an instant access account presently - so how do you increase your yield?