To sell or not to sell?

East_London_Guy

Hi

I own nice (in my opinion) 2 bedroom 1930's flat in East London quite close to the proposed 2012 Olympic park which I initially put on the market in August 2007 for £235K. In September I accepted an offer of £228k and the sale rattled along for a further 3 months until the buyer had a change of heart and pulled out.

In January 2008 I put the property back on the market and after zero interest for about 6 weeks I received an offer of £210k which I accepted. Im due to exchange on the sale next week and the buyers still seem keen to proceed.

My dilemma is that due to the reasonable amount of equity in the property, my mortgage repayments are relatively low at around £600 per month. Im not keen to jump straight back into the market so intend to rent for the next 12 months but seem to be faced with rental costs of at least £1k to £1200 per month for a similar sized property in zone 2 or 3.

Should I forget the sale, wait another 12 months and hope the market balances out or take the money, bung it in the bank and find a reasonably priced rental property?

Rover

From a cold hearted financial point of view, I believe you'd be better off selling.
Monthly returns (post 20% tax @ 6%) on 210k would be about £830 , plus you wouldn't be paying a mortgage. You'd rent, see the market slide and buy back in in 2/3/4 years.
If you are happy in your flat, stay in it and pay off the mortgage.

Gangstabird

Sell, you have no idea what's going to happen and you are lucky to have buyers. Good luck. Sit on the money and wait.

MUDGUTS

Gangstabird wrote: »

Sell, you have no idea what's going to happen and you are lucky to have buyers. Good luck. Sit on the money and wait.

I'd agree with that 100%

loofah_3

I am in a similar quandary myself, wondering what's best to do. Up here in scotland, the markets actually steady but we're not seeing massive price increases. My house is up for sale next week and I intend to rent for maybe a year, sit on the money and see what happens....hopefully pounce on my dream and cheaper home!!

Have you thought about keeping your flat and renting it out as an investment? You would rake in mega bucks during 2012 olympics surely?? The rent you get could then cover your rent somewhere else maybe?

mpsavuk

loofah wrote: »

I am in a similar quandary myself, wondering what's best to do. Up here in scotland, the markets actually steady but we're not seeing massive price increases. My house is up for sale next week and I intend to rent for maybe a year, sit on the money and see what happens....hopefully pounce on my dream and cheaper home!!

Have you thought about keeping your flat and renting it out as an investment? You would rake in mega bucks during 2012 olympics surely?? The rent you get could then cover your rent somewhere else maybe?

Don't be silly. The Olympics only last for a few weeks.A mortgage has to be paid back for many years.

East_London_Guy

Thanks for the comments.

If the exchange goes ahead at the agreed price, I think I'll stick with it and put the cash somewhere that will earn a reasonable rate of interest to subsidise my rental costs. After settling the mortgage + costs (and assuming I dont end up accepting a gazzundered offer!) I should be left with around £100k which will provide a reasonable deposit in a years time.

Ive looked into renting the place out and my local agents tell me I could achieve around £950 / £1000 a month. On the surface this sounds quite attractive and would result in a gross monthly profit of around £300 per month after mortgage costs and service charges. Im not really interested in becoming a landlord though and have a feeling that my lender would probably want to hike the interest rate in return for permission to let.

dopester

East_London_Guy wrote: »

Ive looked into renting the place out and my local agents tell me I could achieve around £950 / £1000 a month. On the surface this sounds quite attractive and would result in a gross monthly profit of around £300 per month after mortgage costs and service charges.

Join the hordes of people looking at doing this. Too late to sell for top whack now... peak was late Summer 2007. Everyone now knows property is going to tank.

If too many people go this renting route, then do you really expect your achievable rent to not fall, as more and more properties are available to let? Also factor in periods when you will have no tenant.

PasturesNew

How much will the interest on your banked cash bring in? You need to add that to the £600 mortgage you won't be paying to see the real difference.

If prices fall, how much will that cost you over the next year (if it falls £1k/month then hanging onto your flat will be costing you £1000+£600 per month to keep)

Gangstabird

People who rent are going into agents now and saying yes I will view the property and coming back with 'Will the landlord drop to xxxx amount'

Please sell. I will not sleep if you don't.:rotfl:

Gangstabird

Lolling in a nice way of course, I can't belive you are thinking about not selling.