There are times when you might find yourself at an unexpected crossroads about whether to sell your home or rent it out.
This could be due to your company transferring you to another region, a family emergency that requires relocation or maybe you want to be with a loved one who lives elsewhere.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, provides some tips:
How permanent is the move?
Is the move for good or is it just for a time?
“If you are packing up and going for good, then it makes sense to sell the property. However, if there is a chance you will be returning in a year or two, the time and money spent on selling the home and purchasing another won’t be worth your while. In that case, renting out the property seems like a far more feasible option,” says Goslett.
Conditions surrounding the market
Do some research into rental prices in your area, as well as current selling prices of homes. Also look at the demand for rental properties and the number of current listings available.
“Doing your homework will provide you with a much clearer idea of what kind of rental income you can expect, as well as what may need to be done to the home to get it up to standard if necessary,” says Goslett.
“It is important that the achievable rental income is enough to cover the expenses. Otherwise, you will need to pay towards the home while paying for another property elsewhere.”
Where is the area headed?
Aside from where the property is located, another influential factor when it comes to a property’s potential is the future development plans for the neighbourhood as well as the condition on the neighbourhood.
“While this aspect is completely out of your control, it will largely impact on the value of the home. Future development planned in and around the area can have a positive or negative impact on home values, depending on what the development is,” sayd Goslett.
For example, Gautrain stations in Sandton, Rosebank and Pretoria have pushed property prices up in the surrounding neighbourhoods. However, industrial type development in some suburbs has negatively influenced the value of homes in the immediate area
Who will manage the property?
There is more to renting out a property than just collecting a cheque each month, and it is not for everyone.
As a landlord, there are certain obligations you will have to your tenants, which could include dealing with issues and emergencies in the middle of the night.
You will need to ask yourself whether you have the time to manage the property or if you will need to hire a management agent. In cases where the rental property is located in another region or province, a rental agent can provide a valuable service that will save you in travel costs.
What are the tax implications?
Each situation is unique, so before you decide to rent out your home consider talking with a tax professional. They can help you figure out how much you can expect to pay in taxes on the rental income.
“Deciding to hold onto the property and rent it out or sell it, will depend on your circumstances and what will fit your needs and situation. Only you will be able to tell what option makes the most sense and will work for you,” Goslett concludes.