Selling vs Renting it out

K2S04

While we are currently on a rental, we are in the process of buying our first property. But, at work , my boss has suggested an opportunity outside the country towards end of next year. Now, this has thrown me into confusion. Should we

a) Continue to rent
b) Buy our property (live in it for 1.5 years) and sell
c) Buy our property and rent while we are away

Personally, I think buying and selling withing 1.5 years (add to it the Brexit mystery), it is not a wise choice. Therefore, I am leaning towards option of renting it out. However, majority of the stories here are not encouraging. Are there any positive stories? Can the rent usually cover Mortgage + Additional fees (Estate agent, etc) or should I plan for still paying from overseas?

Please help

Comms69

K2S04 wrote: »

While we are currently on a rental, we are in the process of buying our first property. But, at work , my boss has suggested an opportunity outside the country towards end of next year. Now, this has thrown me into confusion. Should we

a) Continue to rent
b) Buy our property (live in it for 1.5 years) and sell
c) Buy our property and rent while we are away

Personally, I think buying and selling withing 1.5 years (add to it the Brexit mystery), it is not a wise choice. Therefore, I am leaning towards option of renting it out. However, majority of the stories here are not encouraging. Are there any positive stories? Can the rent usually cover Mortgage + Additional fees (Estate agent, etc) or should I plan for still paying from overseas?

Please help

Being a landlord is profitable, generally speaking.


That doesn't mean you should do it. Have you ever managed a property? Do you understand your responsibilities and the penalties for getting it wrong?


Can you afford to pay the mortgage whilst your away with no rental income?

AdrianC

Requesting consent to let within a year and a bit of purchase is far from certain to be granted - especially if you're at a fairly high first-time-buyer LtV.

Even if it is, do you actually WANT the hassle of running a residential property business from another country? Do you understand not just the obligations of being a landlord, but the extra obligations of doing so internationally...?

What if you come back to the UK and can't immediately move back into your property, because of the fixed term of a tenancy... or because the tenant doesn't want to move out and you need to seek possession eventually finding the place uninhabitable...?

K2S04

Very valid points. Pardon my ignorance but we were thinking of letting it out via a letting agent. Shouldn't they be managing all the need-to-do at a cost (5-10%?). In my head, it was about getting a LA onboard who looks after it while we are away.

AdrianC

Yes, they should be managing everything (well, except your tax)... but it's still your legal responsibility if they fail to do so.

pinkteapot

K2S04 wrote: »

Very valid points. Pardon my ignorance but we were thinking of letting it out via a letting agent. Shouldn't they be managing all the need-to-do at a cost (5-10%?). In my head, it was about getting a LA onboard who looks after it while we are away.

More like 10-25% of the rent for a full managing agent. But yes, they can do it. We're renting and the owner is away somewhere. Everything is through the agent (our address for the landlord on the contract is the agent's address). You will need to be contactable though as if anything needs fixing the agent will contact you to sign off on the cost and it'll upset your tenants if you don't respond fairly promptly.

As AdrianC said, your biggest problem could be obtaining consent to let from your mortgage lender after such a short time.

We can't tell you if the rent might cover your mortgage plus costs. How much will your mortgage be per month and how much are similar properties renting for?

G_M

* New landlords (1):advice & information :see links in next post

* New landlords (2): Essential links for further information

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

need_an_answer

K2S04 wrote: »

Very valid points. Pardon my ignorance but we were thinking of letting it out via a letting agent. Shouldn't they be managing all the need-to-do at a cost (5-10%?). In my head, it was about getting a LA onboard who looks after it while we are away.

yes the agency will charge you for managing. I think your quoted figures for a fully managed service may be a little on the optimistic side.Something around 8% is very good on 1 property some agents will go 12-15%...ive never seen 25% as pinkteapot suggests but TBH a figure of that magnitude isn't beyond the realms of possibility...I was once offered 6% but that was on multiple properties and declined as it was time to self manage after realising its better(and not just financially,things get done quicker when you take out the layer that is the agent)...I wouldn't want to upset agents but the term money for old rope sometimes springs to mind.

Then its not just the managing costs its the hidden type of costs whereby for example a tap needs fixing...a LL who can be hands on can go and fix maybe for nothing more than the cost of a new tap and their time...put that to a managed account and the agent is just likely to send a plumber who's starting price would be the standard sort of £75 an hour plus the cost of the tap.

I'm not knocking the trades element,they do a fantastic job but being an absent LL who cant easily control maintaninance of a property will also mean that on top of the monthly cut the agents take you could be paying a lot for simple issues to be resolved that because of your distance away you have little control over.


Factoring in this type of unavoidable costs suddenly means that the profit you anticipate on a monthly basis is suddenly swallowed up.

K2S04

need_an_answer wrote: »

yes the agency will charge you for managing. I think your quoted figures for a fully managed service may be a little on the optimistic side.Something around 8% is very good on 1 property some agents will go 12-15%...ive never seen 25% as pinkteapot suggests but TBH a figure of that magnitude isn't beyond the realms of possibility...I was once offered 6% but that was on multiple properties and declined as it was time to self manage after realising its better(and not just financially,things get done quicker when you take out the layer that is the agent)...I wouldn't want to upset agents but the term money for old rope sometimes springs to mind.

Then its not just the managing costs its the hidden type of costs whereby for example a tap needs fixing...a LL who can be hands on can go and fix maybe for nothing more than the cost of a new tap and their time...put that to a managed account and the agent is just likely to send a plumber who's starting price would be the standard sort of £75 an hour plus the cost of the tap.

I'm not knocking the trades element,they do a fantastic job but being an absent LL who cant easily control maintaninance of a property will also mean that on top of the monthly cut the agents take you could be paying a lot for simple issues to be resolved that because of your distance away you have little control over.


Factoring in this type of unavoidable costs suddenly means that the profit you anticipate on a monthly basis is suddenly swallowed up.

Thank you for the insight! As such as long as I could break even, it will work for us as we plan to return.

Comms69

K2S04 wrote: »

Thank you for the insight! As such as long as I could break even, it will work for us as we plan to return.

What happens if the tenants don't move out when you'd like them to?

need_an_answer

What happens if the tenants don't leave the property in the same state as you rented it to them in?

Yes I know the answer is claim via the deposit but sometimes the deposit doesn't cover all the work needed.

As a LL I always say never expect a tenant to treat your home in the same way that you would...your home is your home,your rental property is your business,there is a difference and some LL's who rent out their homes struggle to understand the difference between somewhere they used to live and their business premises that they now have paying tenants living in.