When moving houses, property owners need to decide whether to let their house to tenants or sell their home. The choice can be complicated and the correct solution varies depending on the situation. For some, their home can become a liability instead of an asset, while for others it may be an excellent source of steady rent income. Should you rent out your home or sell it and retain its full value immediately?
Whether you are relocating for a temporary new job or moving in with a new partner, you should perhaps keep your house until you have settled in your new situation and feel absolutely certain that you will not be soon returning to your current home. Selling a property you are emotionally attached to might feel like a mistake, especially if things don’t go well after you relocate. Another reason to keep your house is its potential value. It is very difficult even for industry experts to predict whether house prices will go up or down in the next few years. As recent data shows, house prices have been increasing in the past few decades – after a few years or decades, your house will inevitably cost more than what you initially paid for it.
If you are to make a decision replying on this trend, please consider inflation, returns on investments and house maintenance. The price of your home pay double in a few decades, but inflation affects everything. Looking at objective statistics, you can see that house prices grow but so do the average income, taxes and costs of living. Bear in mind that your house will only retain its value once you sell it. Could you maintain your property and invest in it for decades or would you rather get the money as soon as possible?
Do you really want to be a landlord?
Renting out your property is meant to guarantee you a monthly income, but what happens if your tenants do not pay their rent? Your estate agent will do their best to get tenants to pay as soon as possible, but will you be stuck and unable to pay the mortgages? Will you have the heart to evict good tenants, knowing they are facing financial difficulties or choose loose money and struggle financially instead? If you are strong enough to choose evicting tenants who do not pay rent, taking court’s permission to do so may take months. We Buy Any House team has successfully dealt with bad tenants and served eviction notices. We always advise carefully considering all your options and costs before you decide if you should let or sell.
Of course, most tenants do not want trouble, do not engage in anti-social or criminal activities and pay their rent on time. Even with great tenants you would still be required to maintain the property in good condition and carry out repairs. Landlords who don’t have the time to manage their properties let their houses through real estate agencies which will collect rents, schedule repairs and conduct visits and find tenants. This service usually costs between 10-30% of the monthly rent, depending on the length of rent and property managing services you choose.
It’s really worth taking your time to estimate your monthly budget, expenses and incomes in all situations, to make sure you make the best choice when deciding whether you should let or sell your house.
What is your property’s worth?
Research local houses similar to yours available for rent and sale and estimate which option would be more profitable for your house. If your house needs major improvements or can not be let for a profit, would you be better off selling it? You need to consider capital expenditures when deciding whether you should let or sell . Occasional large purchases or repairs such as fixing roofs, rewiring or replacing a boiler could be costly and time consuming. If your profit is £200 per month and you need to spend approximately £6,000 for a new roof, you would have to spend your rental profits for 2.5 years. Will it really be worth the years of effort? Of course, if your property is in good condition, you do not need a large sum to fund your new home and will have a good cash flow, then renting your current home will be an excellent choice. Your house will turn into a steady source of income and you can retain ownership, while still financially benefiting from your property.
Will you profit or incur a loss after deducting all expenses from your monthly rent income? If you are not going to profit after paying council tax, bills, mortgage and landlord taxes, you are better off selling your home.
How long can tenants rent the property for?
As a landlord you would still need to maintain your home and carry out repairs. If you think that your property would need some major improvements in the next few years, then you might be better off selling it. Furthermore, if your property is already poorly maintained, you will most likely find it difficult to rent it out. When buyers view houses, they usually have the right mindset and set budget for improvements and renovations, while tenants are looking for a property in good condition they can move into right away.
What do experts think?
We Buy Any House team believes that every property and home owner are unique – our best advice is to carefully estimate your profit and take your time before you make a decision. When you are ready to sell our team will assist you with a fast and fuss-free house sale. We buy any house, anywhere, in any condition. Whether you are facing repossession, failed to sell your home through traditional agents or deal with bad tenants, we have the right solution for you and your property.