Most of the time you will have a clear idea of when you will be moving homes and have time to plan and make decisions accordingly. However, there are times when life happens, and the decision is made for you. Whether it be your company transferring you to another region, a family emergency that requires relocation or maybe its to be with a significant other in another part of the country. In these situations, you will need to decide whether you are going to sell your home or rent it out.
Adrian Goslett, Regional Director and Chief Executive Officer of RE/MAX of Southern Africa, provided a few important considerations for homeowners who find themselves at this crossroad:
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,” Goslett said.
Conditions surrounding the market
Do some research into what the rental prices are in your area, as well as the current selling prices of the 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. 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 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 concluded. “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. However, industrial type development in some suburbs has negatively influenced the value of homes in the immediate area,” Goslett said.
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. For a percentage of the rental income, a reputable rental agent will assist with advertising the property to rent, screening potential tenants and undertaking full credit checks as well as drawing up the necessary lease agreements among other services.
What are the tax implications?
Each situation is unique, so before you decide to rent out your home consider talking to 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 concluded.