Sell or Rent out

Discussion in 'General Property Investment Discussion' started by Aaron2343, Feb 7, 2019.

  1. Aaron2343

    Aaron2343 New Member

    Hi All,

    I’ve recently finished a full refurb on a property, we bought it for £93,750 and it has now been valued at a sale price of £145-£150,000, with the potential rental income of £625/£650 pcm. We will have spent roughly £15,000 on renovation costs once the final touching up has been completed.

    We’re in two minds what we should do with it, should we look at renting it out or sell it?

    Either way we are looking at moving onto another project afterwards.

    Your advice would be much appreciated as this is our first project.

    Thanks

    Aaron
     
  2. FWL

    FWL Member

    The gross rental yield of just over 5% is not too bad - although not excessive by any means - but if you are looking to do more developments, where would you get funding without a sale?
     
  3. Aaron2343

    Aaron2343 New Member

    Thanks for the response.

    The Property was bought as a cash purchase, so we were looking at potentially refinancing to get the money back out if we were to rent.

    Our main thinking is that we have probably refurbished the house to a standard that may not be needed to acheive a decent rental yield.

    What would you do if you were in my position?

    Aaron
     
  4. Jules1970

    Jules1970 New Member

    Hi Aaron

    I have been buying and selling properties since 2010.

    I use to rent but due to costs last couple years, I decided to flip. It depends what you want to do. Thing is re financing takes away your equity. Last thing you want is all mortgages high to the hilt, though depends what your mortgage is. Of course the property will grow within the next 5 years. If it's all your own cash great! Also you did the right thing in refurbishing to a good standard. Never EVER refurb to a high standard. Tenants do not always respect your property. And if selling buyers may change everything.

    So I would keep buying and selling and build up your pot. And then buy two, keep one and rent one and again keep building it up.

    Julie
     
  5. Jules1970

    Jules1970 New Member

    Also to add do a plan. Like an excel. Do a future forecast

    Julie
     
  6. Aaron2343

    Aaron2343 New Member

    Hi Julie,

    Thank you for your response, it’s much appreciated. Yeah, I’ll think I’ll take your advice and carry on flipping to build a bit of a pot, then look at renting a bit later down the line.

    You mentioned you’ve been involved in property since 2010, how’s it all going? If you don’t mind me asking. We’re very much enjoying the whole process at the minute, even if it is hard graft!

    Cheers

    Aaron
     
  7. diyhelp

    diyhelp Active Member

    That is certainly sound advice - in effect when you build up your pot and then buy a property to rent, this is your savings fund/your pension fund if you like. The cashflow from the rental property(s) will fund you new properties in time if you take your time, plan well and dont rush.

    It would be great to put together a plan of attack for the next few years. However, dont go mad with the goals - give yourself short term targets as well as long term goals.
     
  8. Jules1970

    Jules1970 New Member

    Hi Aaron

    Glad to hear you have taken my advice. I have been through letting and flipping so hope to share my experiences. I have bought 5 properties so far. And have a property in Malta.

    I sold two of my lets and three flips.

    I just sold my recent Reno, though I made a mistake buying further away. Never should had done it but also maybe I just did not know the area. So I would always strongly advise staying in your area or if you do buy further away check it out a lot! Though there was nothing wrong with the house, it was solid and renovated to a good standard. But it was hard to sell. So I put it down to the area. It was a nightmare.

    My others sold within weeks where I lived, not months. They made a great profit.

    I would strongly suggest to do a plan b in case your property takes longer to sell.

    I also source land sites for developers and did one recently in Southeast London/Kent. They are a football team needing a new home.

    So I have done a mixture really.

    It's very rewarding when all comes together.

    Where about are you based?

    Julie
     
  9. PatriciaBrown

    PatriciaBrown New Member

    I think one can earn more money in renting as it gives you money at the end of the month but once it sold out then the only perfect amount you will get out of it.
     
  10. Aaron2343

    Aaron2343 New Member

    Hi Julie

    Thanks for the info, it all sounds very interesting, it’s good to see someone who’s looking to share theirs experiences, good or bad.

    The land sourcing side of things also sounds interesting, do you work in property full time then?

    Yeah thanks for the heads up about looking further a field, I’ll definitely be doing my research if I were to ever look elsewhere. I currently live in Doncaster, and I work in Leeds. What about yourself?

    If you have any tips on selling (which agent to use etc) that would be much appreciated.

    Thanks again.

    Aaron
     
  11. Personally I would continue flipping until you have enough cash to at least put down a big deposit on a rental property. Long term, cash flow is King and this is where rental income comes into play. However, patience is a virtue - do not be in a rush to get to your goal :)
     
  12. Jules1970

    Jules1970 New Member

    Hi Aaron

    Well after buying a few properties I did a bit of networking for a short while and a known speaker told me I would be good at being an estate agent but it did not appeal to me. Then I spoke to people doing sourcing so thought I give it a go! Turned up to sites knowing they were looking to sell and introduced myself and matched them with developers. I really enjoyed it! I sold a few sites and the big one in Kent. Though it has only now got planning approval from Sadiq Khan in London. Sold for a few Million! Tough it is 19 acre.

    I am Southeast London :)

    On the selling front I always prefer independent estate agents as they work harder to ge your sale. Though other main ones do too. I just prefer a more closer contact. Also always check them out and their website if it is badly put together or hard to navigate avoid. You can tell they are goo if they have a great site and feedback in my opinion though meet a few first and then weigh it up.

    Julie :)
     
  13. Jules1970

    Jules1970 New Member

    Apologies for my spelling as getting tired. :)
     
  14. John Wilson

    John Wilson Member Premium Member

    Hey Aaron, my vote would be to sell. Speaking personally, that yield would be too low for me. OR... Would it maybe be suitable to turn into an HMO??


    Sent from my iPhone using Property Forum mobile app
     
  15. Karen R

    Karen R New Member

    Hi Aaron, why not approach a broker with details of your own position and the property in question and obtain terms of funding for a buy to let, it will not cost you anything to do that and once you have terms you can see what you can raise against it, how much it will cost you a month and you can cross reference that against the rental income and then any additional costs like agency management fees etc (unless you choose to manage the property yourself). By refinancing the property, even if the return is less than an immediate sale, you not only start building a status with a lender but you also own a rental property so are no longer a first time landlord which will only help should you decide to rent out further property in the future, it also means you retain that property as an asset that is then available to secure finance against in the future as the mortgage outstanding reduces and equity increases. You can always sell it later. Most brokers will be able to provide you with indicative terms free of charge so you have nothing to lose by approaching one before making the decision to sell.
     
  16. Dan Veo

    Dan Veo New Member

    You must need to rent out your property, why?
    1. The move is temporary: If you plan to return at some point in the future, renting out your home might be the way to go. Consider what’s called the break-even horizon, which is a calculation that helps you decide whether it makes more sense to rent or buy, based on how long you plan to live somewhere.
    2. Home values are increasing: If you can expect the value of the home to increase soon, leasing your home could help you take advantage of that appreciation before you sell.
    3. You can’t afford to sell: If you’re underwater on the mortgage, it probably doesn't make sense to sell. Turning your second home into a rental can buy you some time to gain equity.
    4. There’s a strong rental market: In your area, if the rent you would earn can cover more than the cost of the mortgage (and ideally include property management fees), it might make smart financial sense to lease your home.
     
  17. Myrsatech

    Myrsatech New Member

    Renting is always better than selling. It is the best way to earn money. Nowadays giving retail space for rent is the new trend.
     
  18. nmb

    nmb Well-Known Member

    Hi @Aaron2343

    Just wondering what you decided to do in the end and whether you are still active :)
     
  19. FWL

    FWL Member

    I think investors need to decide whether they are in it for capital gain, income or a mixture of the two. Stick to a strategy so you know where you are.
     
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