Certain events in your life call for changes such as leaving your house and moving to a new one. If you are currently in this situation, you may be pondering about what to do with your old house. Some may have advised you to sell it, the most common practice. Others may have told you to rent it out. Now, you are caught in a dilemma – sell your house or rent it out? Which option should you choose?
When deciding whether to sell or rent out an old house, different things need to be considered in order to make the best choice. Listed below are some of the factors you need to look at to select the best option for you.
Is It a Temporary or Permanent Move?
If you are moving out because you need more space for your growing family, then chances are you would not be going back to the old, smaller house. This means that your move is permanent; hence, you can let go of the house.
Meanwhile, if you are you are temporarily relocating due to work or other reasons, the most sensible option is to rent out the house. This way, when your assignment is over, you can have the option of returning to your old home.
What Is Your Financial Status?
Selling is the most sensible option if you need money to finance your new house – like raising the required deposit or having payments for monthly mortgage. If you are financially stable and able to afford the cost of purchasing a new home while still paying for the mortgage of the old one, then consider renting it out. Doing this gives you additional money which you could put aside.
Do You Have Time to Manage a Rental Property?
As mentioned earlier, letting a house is like having a business – you would need to manage the property. This task can be challenging, especially if you have difficult tenants. It also requires time and effort as you would need to check on the property from time to time.
If being a landlord is not for you, you can opt to get the services of a professional property management company in Ireland. An excellent company can make having a rental property less stressful. Just make sure you factor in the cost of hiring a property manager when you make your calculations.
Sell or Rent Out Your House – Which Is More Profitable?
Sometimes, people opt to let their house focusing only on the money this endeavour would bring. They fail to realise that renting out a property is akin to having a business wherein you would need to factor in operating expenses.
The common practice is for the owner to shoulder the maintenance and repair fees. In some cases, replacement of broken appliances is also the responsibility of the owner. Aside from money spent on upkeep and repairs, insurance and tax fees need to be paid as well.
You must also factor in scenarios such as not having tenants for X number of months. Do you have extra money to pay for your dues during months when the property is unrented? So, before the idea of having a passive income excites you, make sure you do the necessary computation to ensure that renting out your old house is going to result in a positive cash flow.
You should also do the same if you plan to sell your house. How much would your profit be if you sell your property now? If you would earn nothing or just a little amount, it may be best to hold on to your house and sell later when the market improves.
On the other hand, if selling now results in good profit, consider the future. If your house is located in an up and coming neighbourhood, there is high probability that your home’s value would substantially go up. While you can’t be 100% sure of what the market would be like in the future, you can look at trends to gauge what would happen. For example, a number of new shops opening in your area and booming businesses are good indicators that property prices are going to go up. So, it would be best to sell at a later time.
Furthermore, before selling, compare your profit with your projected annual rental income. Which of the two is going to give a substantial return of investment? If the annual rental income is less than 5% of the profit from selling, then the latter is the better choice for you.
Can’t decide whether to sell your house or rent it out? Get some advice from our experienced real estate agent. Call us at 014959020.
Photo by Phil Sexton