At Mr Homes we encounter many of what the industry refers to as ‘accidental landlords.’ This describes a person who is letting their own home without doing the necessary due diligence.
These ‘accidental landlords’ usually fall into one of two categories; the first are those who have made the best of a bad situation, perhaps letting a property that they couldn’t sell. The second are those who were not suited to the role of landlord, for whom ‘falling’ into this role did not end well, perhaps losing their once beloved home to damage or failing to receive months’ worth of rent repayments.
However, if you’re reading this blog it’s likely because you’re intentionally considering becoming a landlord, and looking to do your due diligence in weighing up the pro’s and con’s beforehand– we can help with that!
Pros of Selling Your Home
When comparing selling your home with letting your home, there’s one large advantage that usually springs to mind, selling releases an instant lump sum of equity. This large lump sum might be crucial in helping to buy your next home, or can simply prove beneficial as a ‘rainy day’ fund.
However, you might not have considered the many other advantages you’ll encounter if you chose to sell your home rather than let, some of these are as follows:
- Can be a ‘quick fix’ – Selling your home is undoubtedly less hassle long-term than letting your home would be. Of course, selling is not always quick and can carry its own host of problems, but in the long run letting will usually require more time and energy. Essentially, once you have sold your property it is no longer your concern.
- Avoid tax – As the property your selling was your residential home you won’t be liable to pay any capital gains tax on the profit you make.
- Invest in your new home – If you’re selling your property to move to a new home you can use the profit from your property sale towards your next deposit or any home renovations.
- Instant return on investment – The current rising property market could mean you secure a great return on investment when selling your property.
Cons of selling your home
As with most things, there are also a few possible drawbacks you should consider before choosing to sell your home
- The state of the market – You risk selling your home when the market is falling and losing out on potential return on investment.
- Loss of investment – Selling your home at the wrong time might mean you’re selling a lucrative asset too soon. In this instance you would fail to reap the reward of an asset that could grow substantially with time.
- Negative equity – If your property sells in negative equity you might need to find more cash to pay off your mortgage.
- Sentimental value – One of the reasons many people chose to let their property is because they’re not yet ready to part with their family home.