A question for landlords! Rent or Sell?

Oxid8uk

My partner will be moving in with me this year. He owns his own property and so he is trying to decide what to do with it - rent it out or sell. He’d like to retain it so he has something to pass onto his children in the future i.e. someone else pays off the mortgage plus increase in value over time.

However, I’m not sure if renting out his property will be a good investment. He also can get stressed easily so I am worried he won’t be able to deal with things if he ends up with a bad tenant etc.

So I’m posting to get opinions from landlords as to whether renting out would be a good idea or that he should in fact sell. I have experience of renting out property so know what being a landlord entails, legal responsibilities etc. My gut is telling me he would be better off selling. It would just be good to know other’s thoughts.

Property value approx. £160-170k

Outstanding mortgage approx. £96k

Current mortgage payment (repayment) - £550.  2 year fixed at 4.79% that ends in April 2025 (can get consent to let for a yearly fee but unsure what his lender will require once the fixed rate ends).

Likely monthly rental income - £800-850

He’s a basic rate tax payer (and still will be with the rental income).

He also pays child maintenance for two children based on him having them 1-2 nights per week, so the rental income may increase his CM payments (although I am unsure what figures are used to calculate this).

He only has a small amount of savings.

The property will need around £1k spending on it to get it to a condition suitable for renting (assuming the electrical condition report is ok and no remedial work is required), eating further into the small amount of savings he has.

EPC is likely to come in at a D.

 

Thoughts?

TIA

Keep_pedalling

Unless he has a terrible gambling addiction I can’t see why he needs to hold on to it just to leave his children an inheritance. He could do the same by investing the proceeds of the sale. 

Brie

My OH has suggested we have a rental property in the past and I've always been against it as I know he wouldn't be able to cope with dealing with tenants.  He thinks it's just a case of collecting rent.  I know from my mom having rentals that it's the screening of tenants, dealing with repairs, calls at 2 am because the heating isn't on, non payment, evictions.  The absolutely only way I would consider it is to get an agency to deal with everything on my behalf which would of course decrease potential profit but would also decrease some of the stress.  But that's me, others will say it's a great way to earn extra.  

If he wants to leave something for his kids there's other ways to do this setting up ISAs for them, maybe naming them as beneficiaries on a life insurance policy etc.

Albermarle

Brie said:

My OH has suggested we have a rental property in the past and I've always been against it as I know he wouldn't be able to cope with dealing with tenants.  He thinks it's just a case of collecting rent.  I know from my mom having rentals that it's the screening of tenants, dealing with repairs, calls at 2 am because the heating isn't on, non payment, evictions.  The absolutely only way I would consider it is to get an agency to deal with everything on my behalf which would of course decrease potential profit but would also decrease some of the stress.  But that's me, others will say it's a great way to earn extra.  

If he wants to leave something for his kids there's other ways to do this setting up ISAs for them, maybe naming them as beneficiaries on a life insurance policy etc.

As above, but also think about pensions, as with the right type you can leave them to your kids and in a beneficial tax way.

Stubod

..sell...sell...sell....you really don't want the hassle....(IMHO)

Hoenir

Given he only has a small amount of savings. Priority needs to be his own financial affairs. An inheritance for the children given their ages. Should be a secondary concern. 

ProDave

As an ex landlord, I would without a doubt say sell it.  With all the ever increasing burdens being placed on landlords, you really have to WANT to be a landlord now, not just regard it as something easy to do with a property. 

njkmr

As a landlord in the process of selling I would say get rid.
Agents do not reduce stress. They take 10% and merely take a phone call from tenant before phoning the landlord asking what they should do. If they send someone in to do a repair it's 10% dearer for their slice. If a tenant doesn't pay the landlord will have to pursue it, if the tenants don't pay, it's the landlord who gets stressed because there is a mortgage to pay still.
Sell sell sell.