If you have been looking for quick house sales but have been unsuccessful, and are now thinking "I can't sell my house, should I rent it out," then you need to consider the following issues.
If you rent your place out since you have been not able to achieve a quick house sale, in that case you need to consider the real costs to become a landlord. The following is a set of expenses you should think about when deciding on a rental rather than sale decision.
1) Mortgage; what occurs any time your current interest rates change? Should you be able to handle an increased interest payment? Mortgage rates arrived at an all time low, with only one course to go - up! Will the rent you obtain cover the interest payments when they increase?
2) Rental gap periods; what are the results if it takes you a long time to get a renter? Who actually will pay your mortgage plus your rent for your present new property you've transferred into? What are the results between renters? Tenants can certainly vacate anytime and probable every 6 months. It might show that up to 4 months per year of mortgage payments are actually incapable to be protected by rental revenue.
3) Insurance; remember, you are still responsible for making your insurance payments, which is usually a few hundred pounds per year.
4) Property Management; do you want to manage the property yourself or pay someone to look after this for you? You should budget between 10%-20% of your rent to pay a management company.
5) Maintenance; this may be costly. What will happen should your boiler fails or a ceiling falls in? It needs to come out of your pocket right? Make sure you budget at the very least 10%-15% of your rent to cover this over the year.
6) Tenants default on rent; imagine if you acquire new tenants move in and these people quit paying rent on day 2? It might take you 6 months to evict them, so how can you generate your expenses in the meantime?
So renting your property out may seem like a quick and easy solution if you are struggling to sell your property quickly in a slow market. But, as the points above show, private property rental is not without it's pitfalls and certainly does not guarantee a solution.
So are there any other solutions out there that will help you to vacate your property now, ensure your mortgage payments and associated costs are covered, and enable you to move on? The answer is Yes. There are a small number of companies, mainly focused on the London property market, who will now agree to pay you rent at a corporate rental rate for your property. In fact the amount they pay you will cover all associated costs including your mortgage payments, insurance and property maintenance costs. The rental income you receive will be guaranteed. The whole process is completed through solicitors for your peace of mind.
Furthermore, these companies can guarantee to buy your property at a later stage, so you have the benefit of renting it out now to a stable company, without the tenant and cost issues, as well as a guaranteed sale at a later date.
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