Help - Never been a landlord & no capital - Can anyone help with any Advice please?

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    Help - Never been a landlord & no capital - Can anyone help with any Advice please?

    Hi everyone,

    Please can anyone advise me.. I own a freehold pub / hotel with my family and we can't keep up with the outgoing payments, so situation is pretty desparate - We've been trying to sell the place for about 4 years with no success.
    We have now received an offer for leasing the business, for Full Repairing & Insuring Lease. This would help with our financial problems, but I am terrified of being a landlord, since my family and myself are virtually broke.. our only income is my elderly parents' pensions and my Carers Allowance (my mum had a stroke & my dad and I are her full time carers).
    We are living in a rented house at the other end of the country from our pub/hotel, and we can scarcely meet the rental payments each month.

    How viable would it really be for us to become commercial Landlords, when we have no money to pay for anything at all that might occur?!..

    Please can anyone help? Any advice would be appreciated Thanks!
    Last edited by klingon targ; 14-07-2011, 16:39 PM. Reason: typo error

    #2
    Is the property mortgaged? If it is to be let on FR&I terms there are likely to be little repair issues for you to deal with. Furthermore the property could well be worth more when let which would give you the ability to re-mortgage the property to free up some capital if this is of interest. Or secure an extended overdraft facility against the property.

    Furthermore, you may find the property easier to sell if you so choose after the thing is let and for a higher price than when vacant.Whilst the pub side of things is a bit wobbley at the moment, i saw a report undertaken by Savills which stated the hotel sector (investment) is going to return the highest yields over the coming year or so.
    [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

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      #3
      Thanks for your reply MrJB.
      Sadly we don't have enough time to remortgage or sell before the bank steps in to take the place from us.. the Lease offer has come along at the 11th hour,and is all we have. But to accept and become a Landlord is more frightening to me than the bank seizing it,
      because, as you mentioned, I might be responsible for some repairs, but from the outset, we would not be able to pay for anything!

      Comment


        #4
        If it's Full Repairing and Insuring, virtually all repairs will be liability of the Tenant.

        Furthermore, do you have consent from the mortgagee for the letting, as undoubtedly you will require such consent.

        In my opinion, I cannot see that you have many other routes of dealing with this, letting it maybe your only option as finding a buyer seems tricky.
        [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

        Comment


          #5
          I think you need to let - and fast!
          However you will need some legal help in drawing up the lease and this will cost money. However surely it is better than losing the place to the bank? Find a solicitor who knows what they are doing and get moving. You can hopefully pay the bill from the first month's rent!
          Unshackled by the chains of idle vanity, A modest manatee, that's me

          Comment


            #6
            Thanks for your replies!
            - I guess letting the place might be the only option left in our situation.
            I'm terrified though, because becoming a commercial landlord will I'm sure, involve legal and financial responsibilities, and we have absolutely no money behind us- (We're barely able to pay our own rent for the house we're livng in)

            Comment


              #7
              If the Bank is about to repossess, but circumstances have changed and you have a potential tenant, it should be in their interests to work with you.

              Have you approached the bank to advise them and asked for a period of time to sort it all out. Hopefully they will work with you as it should be in their interest also.

              Communication is everything!
              I also post as Chessy when sober

              Comment


                #8
                Hi, yep, the bank is the lender and are being very good and patient, but I don't know if it really would be worse to become a landlord (who can barely pay the rent for our house, to our own landlord), or just to let the bank take it, and be rid of the place at last

                ..I don't think we are fit physically or financially to be landlords..

                Are there a lot of financial and legal arguments to be settled & paid for as a commercial landlord?

                (We can't afford to pay for anything at all that the tenant might demand or dispute!)

                Comment


                  #9
                  But once you let you have an INCOME from the property so can save up to pay for problems
                  Unshackled by the chains of idle vanity, A modest manatee, that's me

                  Comment


                    #10
                    - Thanks for your replies.
                    In theory we could save the income, but we still owe a large sum to the bank for the initial loan. 95% of the monthly rental income will go straight back to the bank - and I expect Income tax as well will be deducted.
                    I just don't know what's best.. we will be left with very little and we have other payments to cover from it as well..
                    -tis a dilemma!

                    Comment


                      #11
                      Is it possible that the potential tenant will increase their offer to a level that will make it more financially viable?
                      Many peeps offer X expecting a counter offer of Y.

                      Is the property empty at the moment? Is there any potential redevelopment of the premises subject to PP - could part be converted into a separate flat or house in order to increase the overall value?
                      I also post as Chessy when sober

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                        #12
                        The business is still trading with a small staff. It could potentially be redeveloped, but it would have to stay as a pub/hotel - change of use wouldn't be granted, according to the solicitor.
                        The bank has suggested sending the place to auction, to try to recover their loan, since we have found it impossible to sell. We've tried some property buying companies, and pub and hotel chains, but they wouldn't want the place even if it was free!

                        Asking for an increased offer sounds a good idea.. It would have to be about double the price though to make it viable for us. Perhaps if we try to negotiate it though, it is worth a try. Thanks for your advice Chessy

                        Comment


                          #13
                          I would have thought a solicitor would only have advised what the general default situation is regarding possible change of use. In the present climate many councils have to be a bit flexible because it is not in their interests to have empty commercial properties on their high street.

                          It could be worth having a word with the local planning officer and see how sympathetic they are to any changes. They can be a pain in the backside to deal with, or they can be extremely helpful. If necessary you can contact the local councillor who is in charge of Business to get them to help.
                          I also post as Chessy when sober

                          Comment


                            #14
                            Before you run around trying to get an increased offer. Do you think the bank are likely to allow any such letting of this property? You will need their consent to create a tenancy with the prospective tenants. If they're just your average joes with very little experience/personal wealth bank will probably say no.
                            [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

                            Comment


                              #15
                              but they may prefer any let to having to repossess and then be stuck with the property in a poor market????
                              Unshackled by the chains of idle vanity, A modest manatee, that's me

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