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Hi,
I'm in the process of becoming an accidental landlord and have been wondering about how to make my money work whilst it sits in the bank.
Let's say I'll have 200 left after management fees and mortgage have been paid.
What are some solutions available?
Thanks
Separate current account.
Move the cash out each month in to a savings or ISA account, if it’s in your personal name you don’t need to let it accumulate in the current account but you may choose to a little bit just in case of sporadic repairs.
Any specific banks you can recommend?
I just use a high street bank. Doesn’t need to be anything fancy like a business account.
Separate bank account, all income and expenses sorted through it at £200 a month I wouldn’t move anything out of that current account until your upto £1k, easily accessible for repairs. After that I’d start putting into premium bonds. No interest, but easy access, and no risk of a market downturn affecting stocks. Wouldn’t bother with a business bank account for 1 or a handful of properties, just a big standard separate one.
I front loaded the tax savings pot (mortgage interest rate is not a deductible expense so you'll still pay tax on the money even if it has gone to the mortgage) and just put in in a 12 month fixed interest account to know I would have the money available.
For the other money I just put it in a starling easy access saver account, I think it is ~4% interest.
Don't forget rent income is taxed on the whole amount not what you have left. Have you factored this in because for £200 left over each month I would not risk being a landlord it's just not worth it.
I don't have a choice, it's either I'm a Landlord or I leave my flat empty or make a loss on the sale. So I'm becoming a landlord, breaking even and having the flat pay for itself
Nobody becomes a landlord by accident. It is a massive responsibility with massive risks and likely loss of money involved. The reason you give is the worst possible reason to become a landlord and you should definitely leave the place empty if that is the choice. Maybe if it was 20 years ago or even 10 years ago you could take the risk but this just seems an extremely bad choice for you now. The answers you give also show clearly that you have no understanding of the finances involved.
Fair enough I just think you might actually be making a loss from the rental as all new landlords will normally miss out a few figures such as cost for EPC, electrical cert, gas cert (if gas is at property). Then agent fees to find someone which is usually a month's rent, then if you are a handoff landlord wanting the agent to run the place then that can easily be 10% gone per month, maintenance calls tenants always find ways to spring a leak at 10:30 at night. You also have insurance costs these are no longer cheap for landlords insurance, how will you handle if the tenant doesn't pay rent will you be able to afford going 6months to 2 years with no rental income then finding the money to file a section 8. What if they trash the place or run a drug farm (2 very common issues with today's rental market). Sorry if this is accidental but I just want to warn you from my experience of being a landlord that I would rather take a loss and sell them be a landlord for something potentially £200 profit but in reality will be far less. An example is rent reform is making landlords join a register and although we do not what this entails yet I think Scotland already does this and costs like £300
Some good info in there, thank you for this.
I think I've nearly accounted for everything appart from loss of tenant/tenants not paying and should be breaking even (including putting aside month toward emergencies).
I've got an emergency fund for that scenario which I should probably beef up before starting the whole process.
I'll go through my calculations again!
I bank with Nationwide and have a flex regular saver account set up. You can put up to £200 a month in but the interest rate is 6.5%
Similar situation, I use a digital bank with pots or sub accounts.
I like to pay a portion into a maintenance pot, a tax pot, a freeholder insurance pot, and I set £50 a month aside for the tenants to save up and give back at Xmas assuming they’ve looked after the property well.
Monzo are good but I use them for my current account so I used Starling for the property.
That seems useful, are you earning interest on those pots?
Yes, not market leading but not miles off. I think the main pot (maintenance) is at about 4.1%
Starling I think are only offering interest on one pot and the current account balance, so I use it for the one which would have a significant sum. The others I’m ok with not getting an extra 50p here and there
Monzo who’d be my preference do have multiple pots with interest.
r/UKPersonalFinance probably a better source of info for this sort of thing.
Definitely
I wasn't sure which was best so posted in here first. I think I got my answer now! Thanks
If you don't know the answer to this, I predict trouble ahead. For you and/or your tenants.
That why I'm asking before anyone moves in lol
Imagine if Google said that to you when searching for answers.
This isn't Google. Imagine not knowing how to put money in an account.
He’s not asking just how you put money in an account you sausage 😂