Empty House: Sell or Rent?

andysuth

Hi,

I'm trying to sell a rather nice mid-terrace in Liverpool that has been home to my family for the last 7 years.

We had to move for work reasons and to make sure I didn't lose the house we were buying and got my daughter into a good school I was forced to buy the new house in the hope that the old (very reasonably priced) house would sell quickly.

That was nearly 6 months ago. I've since dropped the price (which was already reasonable).

Council Tax has just kicked in again (despite not using any local amenities!), and I'm reviewing whether to take it off the market and rent it out.

Does anyone have any up to date tips or glimmers of hope to offer?

Should I bite the bullet and become a buy-to-let landlord or just keep it on the market?

Any tips, either way (or borderline insulting) are welcome.

-AS

poppysarah

What's selling in the area and for how much?

andysuth

Good Question, it's quite slow moving in the area.

In 2008 one sold for £97k, ours is less than that,
In October 2011 a 2 bed sold for £75k in the next road.

Our road has much larger houses than the roads that adjoin it so it is hard to draw comparisons between the locations.

There are a lot of rental properties in the area which seem to be around the £400 PCM mark, so even going for a BTL mortgage and through a rental agent would still yield good returns.

DannyboyMidlands

If it's been on the market for 6 months then we can safely assume that the price isn't particularly reasonable (or it would have sold).

Forgetting about 2008 because that was the height of the bubble, lets say yours is worth £75k. The gross yield is only 6.5% which wouldn't be enough for me to want to hold onto a depreciating asset and deal with all the hassles and costs and risks of renting.

NS&I certificates are paying close to that tax free with no associated hassles, costs,risks.

I would price it realistically and sell it.

ognum

Any chance of a rightmove link?

andysuth

Danny,

Thanks for the suggestion, I'm now looking more precisely into the figures, would you mind a quick expl. as to the way you reached the "Gross Yield"?

I'm refining the figures, and may reach a slightly different conclusion.

You did however assume that the asset will continue to slide and the cause of the no-sale was the price rather than the lack of confident buyers. It is something I'm considering.

My Index tracking ISA currently got a 16.8% return on savings, though that was drip-feeding and putting in at opportune moments, I do often think of what I could achieve if I'd put my equity in the ISA instead...

Ognum,

I thought about posting the link but decided against it because we may be discussing drawbacks of area and house in specific, so wouldn't want a perspective purchaser to know an exact floor price of what I'd accept.

-AS

tbs624

andysuth wrote: »

Council Tax has just kicked in again (despite not using any local amenities!),...

No -one likes paying their CT x 2 but you presumably want the street lighting maintaining so that your empty property is less attractive to burglars? You'll want the path not to be covered in refuse to put off potential buyers or Ts? Gulleys to be cleaned so that whiffy drain run off doesn't back up to your property? You'd want the fire brigade and /or the police to turn up if a toe rag set your unoccupied home on fire?

How does your current selling price compare to similar properties that have recently sold or are on the market now?

Have you considered auctioning it, with an appropriate reserve in place?

If you decided to let it out, there's obviously more time & expense involved. G_M has a monumental post on here with guidance for newbie LLs.

Would your finances be able to cover voids/non paying Ts etc? Would you have a contingency fund available to be able to meet LLs repairing obligations?

Are you thinking about renting it out as a long term option or would you also still be trying to sell? Note that you need vacant possession and Ts can't always be made to line up with a LLs plans if he wants to sell. Many Ts would be reluctant to rent a property that was simultaneously up for sale.

andysuth wrote: »

Any tips, either way (or borderline insulting) are welcome.

Good to see an OP with a sense of humour

DannyboyMidlands

Thanks for the suggestion, I'm now looking more precisely into the figures,
would you mind a quick expl. as to the way you reached the "Gross Yield"?

[(£400 x 12 months)/property price] x 100

In the good old days you'd have wanted this number to be edging into double figures in order to give a decent return after costs. Just my opinion though. Loads of landlords these days seem content with less.

You did however assume that the asset will continue to slide and the cause of
the no-sale was the price rather than the lack of confident buyers. It is
something I'm considering.

I think it probably will continue to slide and it's certainly a risk that you should consider. Whether the buyers lack confidence or have all been abducted by aliens doesn't matter. If there are no takers at your price (after 6 months) then you are priced too high.

My Index tracking ISA currently got a 16.8% return on savings, though that was
drip-feeding and putting in at opportune moments, I do often think of what I
could achieve if I'd put my equity in the ISA instead...

Couldn't agree more. I currently keep cash in NS&I certificates and buy a few dividend paying shares. Too many people see BTL as the only game in town. I don't think it's a goer unless house prices fall significantly and you don't need to service a BTL mortgage.

andysuth

TBS,

Thanks for the suggestion, I'll look into G_M tonight.

Danny,

Thanks for the logic, it's one of those things that many home owners don't want to consider. Some can't consider.

Hence I'm not convinced it will slide much further as too many would be in neg. Equity and so couldn't sell if they wanted to. Then it would be more if they could afford the mortgage payments, and repossessions would drive prices down further.

Either way, I've just dropped price recently so will see if that brings more attention.

The Gross Return seems to be a good rough measure, should I assume the Net Return to be:

Net Return = (Rental - (Agency fees + Costs + BTLMortgage Interest)) / (Property Price - Outstanding Mortgage) x 100%

As the original does assume an outright ownership of house(?).

Thanks


-AS

rentergirl

How confident would you feel about not using a letting agent, and handling the renting yourself? It would save quite a lot, and be aware, letting agents refer repairs back to the owner or charge them a fortune fortune for sing their preferred contractor) and actually don't do anything much if the tenant misbehaves/mistreats your house. You could use an agent for 'tenant find' not that they always actually do the checks they charge for, and agreements can found online on landlord sites. Good luck!

niceguyed

I would agree with dannyboy on this, he has given you good advice. You won't see any capital appreciation for a long time, you bought in 2005 so it could be another 10 years (if you're lucky) before prices reach 2005 levels. Maybe they will slide more. Your net yield will depend on your mortgage rate and current state of the property (as you have factored in your workings out) and to be honest puts it at the best buy ISA rates.

You then have the risk of problem tenants, voids, repairs, maintaining insurance to name a few. I'd price realistically (which has nothing to do with what you feel it should be worth), take the hit if there is one and move on with your life.