Case Study: BTL gives kids quality accommodation through med school
Tuesday 25 April 2017
Deborah fell into being a landlord 10 years ago, buying a property for her son to live in as he went through medical school in Newcastle. When her daughter followed the same path three years later, Deborah and her husband bought another property, this time in another university city - Sheffield.
Now they’re ready to sell both houses to help their daughter get on the property ladder in London.
“Becoming a landlord was always a means to an end,” explains Deborah. “We wanted the children to be settled somewhere decent and safe for the course of their studies, and it just so happened we had enough savings to pay the deposit on both properties and get two buy-to-let mortgages.
“We also had spare furniture and other household items to get them set up. We even moved our old kitchen units into the first house, and got a brand new kitchen at home!
“Renting to our children and their friends meant we started out with groups of instantly vetted students. Becoming a student landlord is definitely not something I’d have considered if my children hadn’t been involved - and actually if they’d been doing shorter courses we might not have bothered at all. But with five years study ahead of them it seemed the obvious choice, and it’s worked out well.”
When both the children graduated, Deborah couldn’t immediately sell the properties, so she kept them as student accommodation and went through an agency to find new tenants.
Perhaps because her children were her first tenants, Deborah has always taken on something of a mothering role with the students who live in her houses. She says: “These kids have spent their first year in halls of residence, and they’re only 19. It used to be you’d be married at that age, but some of them have literally never even cooked for themselves!
“I think they do see me as a mother figure, and that relationship makes them - and their parents - feel secure. They’re happy to call me up with questions and issues and trust me to get them sorted. They also know I care more about them as tenants than a big anonymous investor might, and I care more about the quality of the house.”
She says: “Renting to students I didn’t know was a bit of a learning curve, because I was suddenly more hands-off. We’ve learned not to keep things like gas and electricity all inclusive, because they’ll live in a sauna all year round! Instead we have a set level and they’re responsible for paying anything over and above it.
“Of course the leasing agency take a percentage of your profits, but they also do things like inspections which are less convenient when it isn’t your children in residence! With students you really do need to go in every 4-6 weeks, which is hard to do when you’re living in a different city.”
Deborah’s advice for other potential landlords is to do as much for yourself as you can. She continues: “You have to be savvy if you really want to make the numbers work - especially if you’re already losing income to an agency. I’d say it’s not something you should do if you don’t have any practical skills or if you’re afraid to get your hands dirty.
“I’ve always done all the cleaning between tenants, and taken care of the gardens. Between us my husband and I we’ve also done bits of DIY, minor repairs and any decorating. If you’re not handy, it eats into any profit pretty quickly.
“We didn’t become landlords to make money - and probably if we’d invested what we had elsewhere we’d have come out with a bigger profit. But our student houses saw both of our kids through university, and we’ll have made enough when we sell both properties to give our daughter a leg up on the property ladder in South London - somewhere she’d never be able to afford a house without our help.
“I don’t think the margins would necessarily work for a professional property investor, but both houses did their job for us, and I’ve enjoyed my time as a landlord. I think buy-to-let mortgages for your children while they study can be a great option for any parent if you can get the deposit together, at least your child’s rent is contributing to the mortgage and you will benefit twice over. Houses rarely depreciate.
“What I’d really have liked is to pass both student houses on to another parent looking to do the same thing - but I’ve not been able to find the right contacts through the universities or local estate agents. Someone needs to join that up!”
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