Making a consistent profit from owning property is a dream of many people. While it is rare for property to represent a ‘passive’ investment (as being a landlord and dealing with the associated headaches is not easy!) it is still an excellent area to invest your money in when looking for long-term financial gain.
If you are presented with the choice of selling or renting a property, it is common to feel conflicted. There are advantages and drawbacks to both options, and these can vary significantly depending on your personal circumstances and the economic climate.
In the blog below, we’re going to outline the advantages of both routes – so you can make an informed decision about whether to sell or rent out your house.
Advantages of selling your house
If your house has increased in value since you first purchased it, selling allows you to ‘cash in’ on the growth in value. This profit can then be used in other ways – for example, to fund the purchase of an even more expensive property, or to enable you to complete some bucket list items, such as travelling.
When you sell your house, it also allows you to move on from any issues relating to your previous property. For example, if you did not enjoy living in the neighbourhood, then you can now move to a different area. Alternatively, perhaps you had problematic neighbours, or there was damp in the property which you were unable to get rid of. While these issues should be disclosed to the buyer when selling your house, putting it on the market allows you to move on from any associated stress and financial challenges.
By selling your property, you can avoid the hassle and expense associated with renting it out. Even hiring a letting agency comes with its challenges, and being a landlord is not always easy. Selling your house gets it ‘out of your hair’ and allows you to move on to the next chapter of your life.
Advantages of renting your house
Renting your house instead of selling it allows you to keep ownership of it. This can be hugely advantageous in the short-term, because it gives you a ‘fall back option’ if you fall on hard times and need a place to stay. Meanwhile, in the long-term, because it means that you can sell your property for an even greater profit further down the line (if the market continues to improve) once more of the mortgage has been paid off.
When you retain ownership of your house, it also allows you to pass it on to your children or grandchildren when the time arrives. If giving your children a good start in life is important to you, and you are at an age where they have not yet moved out, then this could be an important thing to consider.
Renting your house offers an additional stream of income, because the tenant’s payments will keep money flowing into your bank account. This can give you financial security and fund the lifestyle you’ve always dreamed of.
Should I sell or rent out my house?
There are lots of factors to consider when deciding whether to sell or rent your house.
The market conditions can have a huge impact on the decision you make. If properties are selling for low figures, perhaps caused by high interest rates or simply low demand in your area, then it may seem counterintuitive to sell your house during a slump.
Furthermore, the current ‘stage of your life’ will make a big difference. If you are still relatively young and wish to pass your property onto your children, then renting it out in the meantime may seem like the smarter option. However, if you are older (or don’t have children) then selling it for a lump sum, which can then be used to enjoy your retirement, may be preferable.
If possible, you should seek independent advice from an expert before you decide either way. There may be factors which you have not considered and using a professional to ‘sense-check’ your thought process is always a good idea.
Should I hire a letting agency?
For those who decide to continue renting their house, but don’t want the stress and time consumption associated with it, hiring a letting agency is a viable choice. These businesses will take full control of managing your property, including collecting rent from your tenants.
If making a profit from your property is important to you, then make sure that hiring a letting agency does not entirely take away from any profits you make by renting it out. You should get quotes from several different companies, and research reviews from past customers, before deciding on the best business to use.
If you need advice with selling a tenanted property or selling with a home-buying service, then contact us today.
