select
|

The pros and cons of renting your home

While it may never have been your intention to become a landlord and rent out your home, there are certain situations where the need may arise, especially if the goal is to hold on to the property and not sell it, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

 He notes that these situations could include relocating for work or dealing with some financial issues that may have come to light. “Whatever the reason, renting out your home has both its advantages and disadvantages, but depending on the circumstances it could work to your overall benefit,” says Goslett.

Advantages of renting out your home:

1.  A double house payment will be eliminated

The money received as rental income can be used to pay the bond repayment and other expenses related to the home. This is provided of course that the rental income is enough to cover these costs, but even if it doesn’t, the rental income will provide some financial relief to a homeowner who needs to pay for a bond and possibly a rental on another property as well.   

2.  Sometimes it’s better to have someone in the property

If no-one is staying in the property, the house could become a target for thieves, vandals or squatters. This is more likely if the owner has relocated to another city or province and is unable to keep an eye on the property on a regular basis. If the property is occupied by a tenant, the risk of anything like this happening is largely mitigated. The right tenant could also assist with maintaining the property.

3.  The tenant could be the future buyer of the property

In the case where the owner wants to sell their property, there is always the possibility that the tenant may decide to purchase it. The tenant may have been renting while they were saving for a deposit or to cover other costs associated with a property transaction, and could be the ideal buyer. The rental deposit could also be used as part of the purchase deposit..

Disadvantages of renting your property:

While there are definitely advantages to renting out your home, it is not without its downside.

1.    The equity may be required to purchase another home

In the case where a homeowner has relocated and needs the equity from their previous home in order to purchase another, then renting their home out will not be a feasible option.

2.    A tenant could make it more difficult to sell

As the tenant will not benefit from the sale of the property, they might be rather uncooperative during the sales process. The tenants may also not pay attention to the maintenance of the home or make it difficult for buyer to view the property. If the home is unoccupied, it is far easier to make repairs, clean up and get the property ready for potential buyers to view.

3.    The possibility of bad tenants

It can be a long and tedious process to evict delinquent tenants. There is always that chance that the tenant stops paying rent or causes substantial damage to the property. Losing money and incurring additional expenses completely eliminates any benefits from renting out the property in the first place. This risk can be mitigated to a degree by proper vetting and background checks of all possible tenants.

4.    It’s difficult to manage the property from out-of-town

Living in another town and trying to manage a property elsewhere could prove to be rather difficult. In this case it could be advantageous to look into hiring a property management agent who has the expertise to vet tenants, collect rent and ensure the property is well looked after.

“Weighing up the pros and cons will help homeowners to establish whether renting out their property is the best option for them. In the current market, there may be far greater advantages to selling a property than renting it out,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK