Renting or selling (and investing)

Magfrank

I am currently clearing my mother's home, to either rent out or sell, to provide extra income for care home fees. I wondered if anyone knew which may be a better option for maximising income, renting out the property (been quoted circa £1000-1200 a month after letting management fees), or selling the property (valued at 400-425K by estate agents) and investing the money in a high interest account?
(I have little knowledge of what sort of interest accounts are available for such amounts of money).
Many thanks for any ideas/suggestions.

saajan_12

Renting isn't just a passive investment, even with a letting agent / management company, there are always responsibilities and liabilities which ultimately fall on the landlord if the agent doesn't fulfil them. e.g. vetting tenants, deposit protection, chasing rent, repairs, serving notice/evicting through courts (there's only so far an agent will help), tenant changeovers, gas safety checks.. All of these take time and cost money on top of the management fee to just do the admin. If for example, the agent doesn't do a proper inventory and the property is damaged, you can't claim off the tenant and may not have the evidence to claim off the agent. If the agent doesn't properly protect the deposit, you would be liable for upto 3x the deposit as a penalty. You may be able to claim off the agent but a court decision is not guaranteed and would take time to go through.

Basically renting is only really a good idea if you know what you are doing and want to go through that. Interest rates are currently very low and only the first £85k per person per bank is protected under the FCSC guarantee if the bank goes belly up so you would have to split up a signficant sum quite widely.

However, look on the Savings and Investments board for alternative ideas. There are funds which let you invest in a basket of equities and bonds. They take care of the exact stocks based on whether you need frequent access to the funds, your risk appetite etc.

AnotherJoe

You would have to start with a hard nosed assessment of your mothers likely longevity and also the money you need each week. Will the income, lets say for sake of argument its £1k a month, make a difference? Or would you need £1k a week (which is more likely the sort of sum you'd need for a care home as a minimum?) Or do you just need to top it up?

Next thing is, is your mothers home the best bet for rental income? It might well be that using the £400k to buy two £200k modern flats woudl provide substantially more income. After all its unlikely that if you had £400k and were setting out to be a landlord, spending it all on your mothers old house would be top of your list of investment properties. Almost certain it wouldn't be.

As said, also dont discount the cost and hassle of renting.

If you just need to top up to fund care fees as perhaps she has income from other sources, might the £400k invested in low risk income funds be a better bet? That could fairly easily provide £1k a month with zero hassle.

Magfrank

Thank you Another Joe and Saajan12 for your great replies. That's really helpful. The house is in a prime area - high demand for rental and buying but as you mention, perhaps the hassle of renting may outweigh/negate any extra income benefits. I will look into the investment ideas you mentioned. I have posted this query twice (again today) so if you see it again then just know that I was having a 'blonde' moment and hadn't scrolled down enough to see your answers from yesterday ( I am blonde so allowed to say such things!).
Thank you so much, both, again.

G_M

I assume you have POA?

For more on the renting option, see



* Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

Magfrank

Hi G_M,
Thanks for the reply and all the links. That's really useful. And yes we have POA.

Cakeguts

That rent is low for a £400k to £425k property. What sort of condition is the house in. Will it need money spent on it to bring it up to the standard required for a rental property?

Magfrank

Hi Cakeguts,
The property is in really good condition and nice leafy quiet suburban area. Old fashioned decor but no damp or anything. I was recommended to rip out carpets and put neutral coloured ones in some of the rooms but other than that no major changes. The rental prices quoted were from three different estate agencies so must be the going rate round here.
Thanks