All you property people...need advice...again..any opinions appreciated

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Some of you may know mine and my husbands current situation. We moved down to Kent from Staffs on a relocation package but unluckily my husbands company closed 2 weeks after we moved here. We have bought a house that needs extensive renovation (some of which is underway atm) The house is lovely, well will be. It is a 4 storey house, close to beach etc and has great rental potential.

My husband has now got a job in Dorset, which is a good job so we will have to move again (!!) We are unsure about what to do with the house though. these are the options we have.

(1) sell the house and just move!!

(2) split house into 2 flats (it is plenty big enough and has already been done on several of these houses) either rent out long term or as holiday lets.

(3) rent whole house out, either as long term or holiday let.

(4) rent out as bedsits. next door currently has 8 rooms at 300quid+ a month for each room

If we rent out we have the option to move back here when we are old a decrepid. The area is being regenerated at the moment and there are lots of property developers around. i dont think it is ever going to be the best area in the world but that doesnt bother me. If we rent out we will have to rent short term in Dorset but will have the option to have a second mortgage when our rental potential on this house is sorted. i am not after a big money maker but think it might be worth holding on to.

Has anyone ever done this? Is it worth it? and what option would you choose? Wise mumsnetters please help!

If it were me, I'd be inclined to do what needs to be done to bring the house up to scratch (assuming it isn't already) and then rent it as a whole. Less hassle than turning into bedsits which prob have more strict regulations with regard to fire safety etc. Then if you do want to move back it's only one lease that you have to terminate or wait until it finishes. Or, if money is not a problem then I'd turn it into 2 flats, then you have the option of living in one and renting out the other, or selling both. In either event you're likely to make a decent profit imo.

It sounds very much to me as if it might be a great up-and-coming area. I would do some homework to establish what new developments are planned for the area and once I had confirmed that that many property developers working locally were not all wrong (unlikely!) I would definitely hold on to the house. It could end up being the most important investment of your life.

What you need to do before deciding which option to choose from 2,3 or 4, is to do some research in local letting agents to find out which of the three is the most sought-after type of accommodation in your area. Go in a few and ask. They will be happy to advise you in the hope of being able to earn money out of it in the future. Bear these points in mind:

If you rent the whole house out it is a form of putting all your eggs in one basket. If it's empty, your income drops to zero. If a tenant trashes it, you have to repair it before you can let it again. The more small flats you split it into, the less this is a problem.

On the other hand smaller flats will need more maintenance and more work to convert. You will also need planning permission if you wish to convert into flats. This will take 2-3 months to obtain even before you begin work. Then if you go back to live there you will have to reverse the whole operation.

Good point Delgirl about the fire regs too. That reminds me, once you get into the territory of council inspections and so on it can get overwhelming.

oops! other option was to split into two flats and have one as long term letting, other as holiday let - so then we would still be able to stay at the one flat as a holiday iykwim! Also the house 2 doors away (& 3 doors actually) has made it into 3 flats but I dont know whether that would be any better than 2 atm

anorak, I am going to get some agents out some to talk to them I just dont want to let the house go, even after my soil pipe catastrophe!

this is a similar proerty here

for high season it is 1200quid a week!

Lovely! But you have to research your area, the rents might not be the same. The whole success of your plan rests on the location being right.

Letting agents - definitely have to be your first stop.

mmmmmm i know anorak, you are very right!

my friend rents out a studio/cottage on the same street. It is a bathroom/kitchen downstairs and an openplan lounge/bedroom upstairs and she gets 350 a week high season and rents longer term in winter for 400 per month. Which i didnt think was that bad, and she is fully booked btw

Sounds very very promising as an investment to me.

Sell it.
You will have to manage the rental and the work from Dorset - which won't be easy. Market is not going to rise foreevr - it may not crash but it can't carry on rising. Interest rates though can, and therefore so would your mortgage payments. Rental yields are the lowest at the moment that they have been for years. You are not going to make oodles of oney - so is it really worth the hassle?

hmm that is my concern. My mortgage is less than half its value, so that must be good. Arrggghhhhhh someone tell me what to do!

but must add it wont be just rental, it will most probably be a mixture of rental privatley and holiday lets

I like the idea of two flats, one a long term let and the other a holiday home (which you could advertise on Mumsnet ) . Spreads the risk. But the others are right, you really need to get some decent advice from local estate agents/holiday letters (is there such a word?) . It just seems a shame to sell it after all the work you've done if there's any way you can hang on to it.

Unless you are really prepared to treat this property as a business and spend a lot of time on an ongoing basis on it, I would just sell up and go. It sounds as if a considerable investment of money will be necessary to rent the property as either a single house or in smaller flats and that's before the things you haven't even considered like the various safety regulations to which you have to conform. You will also need to inform your mortgage lender as you will probably find that your mortgage is based on living in the house and different terms may apply if it is not your main residence. Many lenders take a reasonably sanguine view on this but it will be more difficult if e.g. you then purchase a second property in Dorset. Your insurance policies will also change.

Unless the area is very popular and there is a shortage of rental properties, it will need to be finished to a high standard to attract good tenants. You also have to consider how you would manage it - would you do it yourself which could involve lots of trips from Dorset or would you pay an agent to do it (typically 15% per month for full management). You can do it for less but then you usually get a reduced service from the agent and are e.g. responsible for employing and supervising your own tradesmen when something goes wrong.

If you are going to rent, I think you have to decide either holiday or longer term rental. I know as a prospective tenant I certainly wouldn't be enamoured with living in a house where some of the "tenants" are going to change every week and you have to deal with the noise and disruption of people who are there primarily to have a good time, probably come in late at night etc. Also holiday rentals (although commanding higher rental) will require much more money upfront to completely furnish and equip the flats, money for marketing, getting listed on websites, joining holiday rental agencies etc.

Although a local lettings agent could be a good source of information about rental amounts etc, a much better bet would be to find someone who actually owns a property (or properties) similar to yours (or even a single flat would do!) who will be able to give you a much more realistic idea of costs, things which can go wrong, etc. Then you can work out an accurate budget, taking into account factors such as e.g. what happens if the house or one flat or three bedsits or whatever are empty for 3 months, how much does it actually cost to have cleaning every week and maintenance on holiday lets, how long is the holiday season, can you get by during the 5/6/7 months when your holiday flats are not rented out?

Lots of things to consider!

I know I've already given my tuppence worth but if you can afford to, I would really keep hold of it. Even if you don't make oodles of spare cash, if the outgoings are being covered in full then it's a worthwhile long term investment imo. I wouldnt advise anyone to sell up unless they were in dire need of the equity.

Get a decent managing agent who will be able to attend to any maintenance for you. It is costly though, usually between 10 & 15% of the monthly rental but worth every penny. I rent my flat out and pay 12.5% but they see to everything and I don't have to worry about it. If I think of anything else I'll let you know.

As the others have said, check with several letting agencies about renting to see what they say. If the figures stack up, re-mortgage onto a fixed rate mortgage to get some security for the time being and try to get planning to split into two flats. Rent one long-term (but only a 6 month lease initially) and see if you can get enough from it to pretty much cover the mortgage, then let the other as holiday lets. For the holiday lets you need to get someone local to act as a housekeeper so you know that on change over day everything gets done properly without you having to do a thing. Don't do it as one house if you can avoid it, you'll get more with two smaller ones and won't need to worry so much about no rent coming in. I think the market has pretty much peaked in most places for the moment, but houses like yours in an area that is being regenerated don't come along very often and I think you may well kick yourself if you sell it, long-term I'm sure it will be a good investment. Bedsits can be a major hassle as they tend to have a faster turn around and you can be forever sorting out tenants.

The market here is fairly quiet at the moment and I've noticed a couple of houses fail to sell and come on as rentals. I think it would be a good idea to rent here for the moment until you find your feet anyway, then you can buy using the equity on your current house at a time that feels right when you know exactly where you want to be and hopefully get a good deal on your next house in the process.

wimborne beety will you visit me?

thanks everyone for the advice and keep it coming!

yes it seems ok area to rent, It is prime loaction for holiday lets, plus flats are sort after as it is a retirement place, plus students etc

I'm near Wimborne Fio, it's really lovely and has some great pubs too. And there's a festival on each summer but you've missed it this year, still there's always next. I'd like to live there really but hate spending too much time travelling to and from work. Am very

Hi Delgirl, you can't be very far from me then, I'm right by Wimborne.

You both should look at the Dorset meet up thread