Sell your home or rent it out?

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, but sometimes the decision is made for you.

Whether your company is transferring you to another region, there’s a family emergency that requires relocation or you want to be with a significant other in another part of the country, you will need to decide whether you are going to sell your home or rent it out.

Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, provides a few important considerations for homeowners who find themselves at this crossroad:

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 buying another won’t be worth your while. In that case, renting out the property seems like a far more feasible option.

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. This will give you 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.

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 of the neighbourhood. While this aspect is out of your control, it will largely affect 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. For example, Gautrain stations in Sandton, Rosebank and Pretoria have pushed property prices up in the surrounding neighbourhoods. However, industrial development in some suburbs has negatively influenced the value of homes in the immediate area.

There is more to letting a property than just collecting the rent each month, and it is not for everyone. Landlords have certain obligations to tenants, which could include dealing with issues and emergencies in the middle of the night. You will need to be sure you have the time to manage the property or if not, you will need to hire a management agent. If the rental property is 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 advertise the property to rent, screen potential tenants and undertake full credit checks as well as draw up the necessary lease agreements, among other services.

Before you decide to rent out your home consider talking with a tax professional who 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.