Deciding whether to sell or rent a house can be a complex and complicated decision. Learn about some of the key considerations when making this decision…
It can be difficult to decide whether it is better to rent a house or to sell it by putting it back on the market. There can be many factors to be considered and it often comes to a personal choice about the level of involvement and time you want to invest. Renting and selling both have their own set of risks and benefits. Renting has to be looked at as an investment and you’ll need to decide if the property is in an areas that will appreciate or depreciate over time. Below are a few of the most raised concerns when you are trying to decide whether to sell or rent your property.
Consider the State of the Current Market
Before deciding whether to sell or rent out your house, it’s important to carefully evaluate the current market conditions. This will help to understand which might be a more profitable decision. Taking a realistic look at the neighborhood where your house is located is an essential first step. Understanding whether there are rental properties located in the same neighborhood can be key. Comparing with other similar properties that have been rented out over the last six months to a year helps to provide information to allow a decision to be made. This will take some work to research, and you may want to discuss the local property values, rate of appreciation or depreciation with a property professional such as a surveyor or estate agent.
Looking at these factors will give you some idea of what to expect in terms of the market over the long term. You can estimate your property’s future value based on the trends over the last three to five years. If the values are declining it might be best to sell if you want to make a profit. Waiting for a declining market to correct itself and start to go up can takes years and sometimes decades.
Consider the True Cost of Renting
If you choose to rent a house instead of selling it, you will need to consider the costs involved and what to be aware of when renting a house. Sometimes it’s the not the monetary return you need to consider and instead you may need to consider the potential disruption to your life – having to get up in the middle of the night to go check on a plumbing emergency. Its almost certain that if you intend to keep the property for the long term, that you will need to evict a tenant at some time. This can be extremely emotionally and financially stressful. Are you prepared to deal with terrible tenants who do not make their payments on time; or residents who destroy the house, its contents and leave it in a mess for you to clean up? These are all very real situations that you’ll have to face at some point if you choose to be a landlord, especially for the long term.
There are also financial costs associated with renting out your property. The law protects tenants and ensures that the rental property is maintained to a certain standard. This means that as a landlord, you will have to be financially prepared to make any repairs to keep the home up to a good condition. You are responsible for maintaining the building including the roof, garage door and windows, boiler and electric. These all tend to deteriorate with use and it’s the Landlord’s responsibility to ensure they are in good working order. You’ll also have to ensure insurance for is in place. All of these are expenses that need to be considered before you answer whether selling is better than renting? And whether you should sell the house.
Consider the Rights of Tenants and any Restrictions
There are laws in place to protect tenants and landlords. These rules are in place to protect both the tenant and the landlord. They determine when and why a landlord can access the property, how and when an eviction can take place, how often and how much rent can be increased, and how to protect and return security deposits. These laws have a huge effect on the profitability of a rental investment. While they are in place to protect both landlord and tenant, they can reduce how much profit you make on the property. Making sure you earn enough money after expenses to break-even or make a profit is essential.
Consider the Taxes You’ll be Responsible to Pay
If you have rental property and you get an income from it, you are likely to be required to pay tax. The income is considered as income just like any wages you would get from a job, or dividends you may receive from stocks. The good thing is you can write off costs some of the costs that are incurred if they are from renting the property. You will need to keep very precise records so you can account for profits and losses at the end of the year. You may need an accountant to give you the advice about how to do this, or perhaps do it for you, for a fee.
So, should you rent a house instead of selling it? In most cases, you are probably better off selling the house, especially if you can make a profit. Renting a house is a significant commitment that will not end until the property is sold. Keeping paying tenants in the house and reducing voids is essential, as is maintaining the property with the least amount of expense. You will need enough money available quickly to handle any expenses that arise from the rental property. Whether or not it is best for you – is your decision. Which way will be more profitable for you?
Sell to a credible company, fast and for cash
If you decide to sell your property a cash buyer may be the best options for you. When you sell to a cash buyer, we’ll buy your house in any condition. We’ll buy it as is! At K&G Lettings Limited, we’ll make you a no obligations cash offer for your house in order to help you avoid the stress of getting your house ready for the market.
Have a question? Give us a call! We’re always ready to talk. No matter if you have questions about the house selling process, or want to get a quote for your house, we’re more than happy to help! Reach us at 01482 961961, or send us a message on our website!