Property Investment Advice (IV) – To Sell or Rent?

Welcome to the fourth episode on Property Investment Advice (IV), in which I am going to cover if you should consider to sell or rent it out if you own a property. If you missed the previous three articles, click the following links:

Property Investment Advice (IV) – To Sell or Rent?

Property Investment Advice (IV) - To Sell or Rent?

To answer this question, you should consider a few factors that will affect the value of a property.

Appreciate rate

You should consider if the property value /rent will rise in a long term and be able to generate net rental income that can cover the future expenses of maintenance fee, refurnish work, small scale renovation and etc,.

Without proper maintenance, tenants will move out and leave bad reviews on your property – the power of social media. You will never get new tenants anymore.

If you see a gradual lessening in equity amount – more repair works as the property ages and you need to fork out a lot of money to keep the property condition, then probable you should sell it off.

If you think the property value will be stagnant in near future or due to strong competition and constantly get a disagreement between owner and tenants, then you might want to consider selling it too.

Handling Fee

Property Investment Advice (IV) - To Sell or Rent?

Still remember how much you have paid when the transaction was made? The amount of agent fee, legal fees, and other documentary stamps is not small.

This will be required if you plan to sell it – transfer of ownership. Take this into account before selling off your property.

Other than that, you may want to refurnish the property before handling it to the new owner and altogether with the handling fee, it may cost 10% of the property selling price.

Timing

Property Investment Advice

Property values go up and down over time. It is important to sell at the right time.

Always do research and talk to the real-estate experts to learn when is the best time to sell in order to make profit from there.

When the property can be sold with a good price as compared to your purchase price, you should also put the property up on sale.

Projection

Property Investment Advice

This is difficult but you should ask yourself if you will have an increasing owner’s equity over time.

If you are thinking to rent the property out, estimate the monthly cash flow and the repayment that you need to do.

If there is only small profit you can gain from all the deduction, you should consider selling it if you know it will not change in 10 years time. Perhaps, selling the property might be a good option in this case.

Summary

To rent or to sell. Always study the market and do not be hasty in making decision over selling a property. Once sold, you will never get the same original price that you have initially paid.

Do always make sure that you will not regret from making your call. I always read the property outlook every quarterly.

There is a very useful website that gives a good overview on house price index.

Property Investment Advice

Though it may not give all information in detail, it does give you an idea the current and forecast market conditions of the real-estate.

Again, if you missed the previous posts, please read them here on Property Investment Advice (I), Property Investment Advice (II) and Property Investment Advice (III)

I hope you enjoy reading this.

Regards,

Alex

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Property Investment Advice

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22 Responses

  1. Emmanuel says:

    Hi Alex, I think your article on Property investment advice is a timely one. Especially in an era where peoples pensions are expected to go up in flames, If people will heed your advice and put some of the 401k into properties, they should ride the harsh storms comfortably. But I think if you property is in a prime area, then refurnishing and renting will ultimately win over selling.

    • Alex Y says:

      Hi Emmanuel,

      Thanks for your comments and indeed if people can put some fund on properties when they are young, it will work just fine over time.

      Regards,

      Alex

  2. Chris says:

    I wish I’d found this article about 7 years ago when I purchased a house in a fishing village. Great location but I’ve moved on now to the city with my partner – stuck with the rural house and cannot sell it!”
    Didn’t really know much about investment with properties at the time – regret it now!

    • Alex Y says:

      Hi Chris,

      It’s never too late to start investing in properties. At least you are putting money on something that is promising and will earn you some profit over time. Even if one day you want to sell it off, it will not bring you significant loss. Of course, you should always evaluate before you buy.

      Regards,

      Alex

  3. Steven Dinmore says:

    It is a difficult decision whether to rent or sell. In the UK prices are rising and there is fear their may be a housing crash. It seems the trend here is to buy and rent out. Lots of people are becoming landlords with buy to rent mortgages. The advice you have given is clear and easy to understand and it will make people think about their options

    • Alex Y says:

      Hi Steven,

      Timing is very important, if the buy and rent trend is going on, it is either too late or just the right time to do as what other people are doing. It is always advisable to really study properly the market outlook and make sure the property is worth investing. Again, investing in properties is just one of the investment portfolio and some people opt for gold or share.

      Regards,

      Alex

  4. Fidel says:

    This a very informative post. Really haven’t thought of these factors when considering to sell or rent out one’s property. I always used to think that you can rent it out or sell it outright as and when you please. But your article has given me a clear idea that, it wasn’t the right way to think about it.

    I have really learnt alot from this post and will bear it in mind when thinking of selling or renting out any of my assets not just my house.

    thanks for sharing this info

    • Alex Y says:

      Hello Fidel,

      I am glad the article gives your some valuable information on property investment. Yes, indeed, there are a lot of factors when it comes to whether if you want to sell it off or rent it out.

      Regards,

      Alex

  5. Chloe says:

    Very interesting take on rental properties.
    I have a couple of houses myself, and they’re rented out by the room- but that’s what I bought them for. I think that the biggest thing to look at when it comes to rental properties is whether the numbers work. If they don’t, then you’ll probably be doing yourself a favour in selling it. If, however, you’re making money from the property each month, then unless you need a lump sum of money, I’d keep hold of it.
    It’s just my opinion, of course! But I found that buying cheap houses, renovating them and renting out by the room is a good business model in this area.
    Best of luck with your properties,
    Reece

    • Alex Y says:

      Hi Reece,

      It is great to hear that you rent out the houses/rooms. I couldn’t agree more with you. Investing in property is recommended but it needs to be planned and evaluated from time to time in order to make sure that the owners are not trapped in paying significant amount of loan repayment when bad time hits.

      I agree with your point that unless I need a lump sum of money, I would keep it. I also sold some properties of my own just to diversify my investment portfolio. That is how I move my investment around from one to another portfolio. You can have a read on my article here – Smart Investment Tips.

      You too, best of luck with your investment!

      Alex

  6. Boniface says:

    Nice insight there on factors to consider when deciding to sell or rent out property. Personally, I’d also like to evaluate if that property that am considering selling or renting out is currently an asset or liability. If I am incurring more expenses by keeping it, then it is more of a liability than an asset. To sell it would only happen if whatever new property I’ll gain will have more appreciative potential at a less cost. That means I could sell, and then buy new properties and have a margin/profit. Renting would come only when I know I’m getting a profit from the renting than I would if I occupied the house and not paid rent myself.
    Thanks for your eye opening insights.

  7. Rigo says:

    These are some great tips! I’m a licensed welder and plan to invest my money in different things. One of them being investing in properties. Buying, selling, and renting. All that good stuff! There are times to sell and times to not sell, as you mentioned. I’ll definitely keep these tips in mind when I start to invest in property.

  8. Daniel Aittie says:

    Hi Alex,

    Investment should be a priority to everyone because by it we can preserve our future. Thanks for the insight into whether to rent or sell a property. And this dependent on the appreciation rate, handling fee, the timing and future projection.

    These points have been well noted. But I will be delighted to know the pros and cons of renting and selling a property.

    Keep the good work up.

    Cheers

    • Alex Y says:

      Hi Daniel,

      Thanks for dropping by and gave it a read.

      Thanks too for giving me a suggestion on what I should blog for my next article. I think the pros and cons of renting or selling a property largely depend on how the market moves.

      The major concern of renting or selling a property is taxes. There are tax breaks associated with the property that you have lived in for a certain period of time. In some countries, if you are married, you will get some kind of capital gains tax-free. You should first look at the taxes and determine which is more preferable.

      The next one is the cost of renting. Damage and other problems that can occur with a rental property. That simply means you have to reserve some money to maintain the rented property.

      There are a lot more other factors than the ones mentioned above. Subscribe my newsletter and I will keep you posted.

      Regards,

      Alex

  9. Matthew Thomas says:

    Before recently, I always thought that buying a rental property would be a nice, easy way of generating an income. But in reality, it seems like there’s a lot of upkeep and frustration that can come along with it.

    Having to deal with repairs both small and large, and most of all, tenants who may complain,or worse, not pay their rent. Seems like it has the potential to turn into a nightmare! Do you have any experiences with rental properties? And do you think it’s worth it?

    • Alex Y says:

      It is very common to have these problems when you rent out your properties. I engage a professional property agent to take care of the place. That saves me a significant amount of time in taking care of the rented unit. At the beginning, it is better to buy a place where it is close to where you live. It is much more convenient for you to make sure the rented units are well maintained. To me, it is worth it in a long run. At least, I am happy with the income.

  10. Matthew Thomas says:

    Before recently, I always thought that buying a rental property would be a nice, easy way of generating an income. But in reality, it seems like there’s a lot of upkeep and frustration that can come along with it.

    Having to deal with repairs both small and large, and most of all, tenants who may complain,or worse, not pay their rent. Seems like it has the potential to turn into a nightmare! Do you have any experiences with rental properties? And do you think it’s worth it?

  11. Matthew Thomas says:

    Before recently, I always thought that buying a rental property would be a nice, easy way of generating an income. But in reality, it seems like there’s a lot of upkeep and frustration that can come along with it.

    Having to deal with repairs both small and large, and most of all, tenants who may complain,or worse, not pay their rent. Seems like it has the potential to turn into a nightmare! Do you have any experiences with rental properties? And do you think it’s worth it?

  12. Matthew Thomas says:

    Before recently, I always thought that buying a rental property would be a nice, easy way of generating an income. But in reality, it seems like there’s a lot of upkeep and frustration that can come along with it.

    Having to deal with repairs both small and large, and most of all, tenants who may complain,or worse, not pay their rent. Seems like it has the potential to turn into a nightmare! Do you have any experiences with rental properties? And do you think it’s worth it?

  13. Matthew Thomas says:

    Before recently, I always thought that buying a rental property would be a nice, easy way of generating an income. But in reality, it seems like there’s a lot of upkeep and frustration that can come along with it.

    Having to deal with repairs both small and large, and most of all, tenants who may complain,or worse, not pay their rent. Seems like it has the potential to turn into a nightmare! Do you have any experiences with rental properties? And do you think it’s worth it?

    • Alex Y says:

      It is very common to have these problems when you rent out your properties. I engage a professional property agent to take care of the place. That saves me a significant amount of time in taking care of the rented unit. At the beginning, it is better to buy a place where it is close to where you live. It is much more convenient for you to make sure the rented units are well maintained. To me, it is worth it in a long run. At least, I am happy with the income.

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