We spoke to Robert Starr chief executive of Seico Insurance and Mortgages about how he became an accidental landlord.
Seico specialise in providing a specialist but hassle-free service – if you would like to speak with a member of the team take a few minutes now to get in contact with a friendly advisor. Here’s what Robert had to say about his foray into being a landlord.
Did you always think you would be a landlord one day?
While I always thought it would be great to get into property rental, I never actually thought I’d become a landlord. Being a landlord seemed like a job in itself, and I already had a job. Plus, buy-to-let seemed like the preserve of those far wealthier than me.
So how did you end up becoming a landlord?
It came about completely by accident. As my family grew, we wanted to move house. We found the perfect property with the right amount of rooms, a great garden, nearby schools and a superb location. The problem was that it was also the ideal property for lots of other families, and a bidding war began. As we watched the price head up and up we realised that we could no longer compete, and we needed to find something else to give us an edge over the other buyers. I realised that the extra thing we could offer was speed: we could tell the sellers that we could complete quickly, as we would buy their house without selling ours.
We had enough equity in our property to convert our mortgage to a ‘let-to-buy’ mortgage, which means you remortgage your current home and then rent it out, releasing money for a deposit on a new house. As a result I needed to borrow less on the new purchase, and we could complete the deal without selling up. I found tenants to move into our old home, and their rent could cover the increased mortgage on that property.
That was eight years ago. We had always planned to sell the house eventually, but the tenants paid on time each month and never caused any problems. Since they wanted to stay, we just didn’t get round to selling it. I became an accidental landlord.
At what point did you decide to increase your property portfolio?
A few years after we began to rent out the first property, I decided to get it valued. To my surprise, it had massively increased in value. With all the equity sitting there and my happy tenants still in place, I decided to repeat the process. I withdrew some of the equity and used it as a deposit on another property, making up the balance with a standard buy-to-let mortgage.
My new tenant moved in the same month that the purchase was completed. Last year I did it again, this time taking equity out of both properties and using it to buy two more. Again, I topped up the cash with buy-to-let mortgages. While I had started out as an accidental landlord, I’d now become the owner of multiple rental properties, without having to save up any cash. One property had become four.
What are your future property plans?
In a few years I plan to do the same thing again, and get myself a fifth or even sixth rented property. It turns out that being a landlord is actually not a full time job, and it’s not just the preserve of the cash-rich. It’s actually great fun, much more accessible than I realised, and an exciting way of planning for the future.
Robert’s landlord tips
If you need to move but can’t sell your property, don’t feel stuck. Instead, investigate the local rental market and consider a let-to-buy mortgage as a way to release equity.
Once you’re a landlord, keep a close eye on house values and get an estate agent round to value your property on a regular basis. An increase in value may mean that you can release some more equity to buy another rental property.
Don’t underestimate the value of good tenants. Someone who keeps the property up to scratch and pays their rent on time will make your life as a landlord much easier, so it’s worth choosing tenants carefully and keeping them happy.
If you’ve got other commitments like a full time job and a family, it’s a good idea to use a property management company to deal with your property and your tenants. The company will usually take a percentage of your rent as their fee.
Have you or someone you know ended up as an accidental landlord? Let us know in the comments below!