Should I sell or become a landlord?

[Watto1]

I keep changing my mind about what to do!

DM sadly passed away a few months ago and left everything to my sister and me, including her house.

Dsis does not want us to rent the house out together, but she would be prepared to sell her half to me. Due to the rest of my inheritance from DM, I would just about be able to do this without a mortgage.

A quick look on rightmove tells me the house would rent for roughly 300 per month. Obviously, I would have expenses to take out of that. Plus, the house would be sitting there, (hopefully) increasing in value.

The alternative to this is to sell mum's house, pay off my own mortgage and extend my own home. I would love to be mortgage free and to have an extension but having a second property seems too good an investment to miss.

What shall I do?!?

[bonborez]

Maybe buy your sister out, rent it for a couple of years and see how you manage the hassle, dealing with the wear and tear, demands of tenants etc.

What kind of condition is it in. Presume you've thought about costs of being a landlord, capital gains tax etc?

[Mrsladybirdface]

£300 is not a lot of income. It would only take for the boiler to be replaced and you'd start to be out of pocket! Get mortgage free!

[Binkybix]

Sorry to hear about your mum.

I'm in a similar position (but whether to keep existing flat and rent or sell it as we move into new place). My situation is a bit different because we'd be stretching ourselves but I think we've decided to sell because:

• we could get a better monthly return by paying off mortgage earlier + alternative investments.
  
• I think property market has nearly peaked for some time and I don't want money tied up for a really long period to try to benefit from house price increases or to recoup if prices fall
  
• I don't want the hassle or to be hit by CGT. I also can't be bothered to do tax returns which you need to do if renting.
  

A lot of the decision depends on your own circs and whether you want to invest the money for later benefit or enjoy now.

If you do rent then HMRC do an online guide for first time landlords. I've not done it but think it's easily googlable.

[morethanpotatoprints]

Sorry to hear about your mum OP
I would sit on the money for a while until you are sure, is your dsis in a hurry to sell the house.
I wish we had bought my parents house, however we did buy another one and we rent it out.
It has cost us next to nothing yet, and I never bother my tenant and she doesn't bother me unless she has to.
It really is no big deal being a ll.
An investment for the future is brilliant and the house would increase in value. You can decide whether to sell in the future or keep depending on what the market does and interest rates for your home.
I think it gives your money some flexibility, rather than it being lost in a mortgage. With rates being low atm you don't have anything to lose.

[TheCraicDealer]

I wouldn't do it, not for £300 a month. Once you take into account insurance, general maintenance and repairs and tax it wouldn't be worth it IMO. Keeping the house will increase stress, paying off your mortgage and extending the house will improve your quality of life. No brainer to me.

[Watto1]

Thanks all . Plenty to think about.

[mummyof2munchkins]

I rented out my home after moving in with my DH. Housing market was low so it seemed a good investment.

Sadly we got a dreadful tennant who only paid 1 months rent, literally stole my flooring, fireplaces, curtains and white goods whilst causing as much damage as possible on their way out. As a landlord I had no real comeback. It took 6 months and a lot of money to get the tennant out and several thousand pounds to get the house back into a place that could be lived in.

I've now accepted an offer to sell for roughly £20k less than i could have accepted if i'd sold it a couple of years ago rather than renting. The house had dropped in value because of the market slump and the fact it's just not even nearly at the standard it was when we lived in it. I have to sell because the stress and upset of owning this second property has made me ill and finacially cost us so much.

Not everybody has this horrible experience but it does happen and from bitter experience its a big risk you have to plan for. I had landord insurance, unfortunatley it had a limit on the amount that would be paid out for malicious damage.

My advice would be to proceed very carefully. There is very little sympathy out there for landlords and you have few rights and a great deal of responsibility.

Good luck with the decision you make and I'm very sorry for the circumstances.

xxxx

[whataboutbob]

I have had to become a reluctant landlord because I have power of attorney for my dad, who has dementia. He has a rental property. After 1 year, I would say it is a lot of work,but gets a bit easier as you get used to it and learn the ropes. I have used letting agents as there s no way I'd be able to do all the stuff required,not least finding and vetting tenants. £300 is not a lot. I am just spending £3000 on a new boiler. Had to previously spend £10000 for complete redecoration and new wiring. Da d had neglected the property. I think you need to consider the following : can you manage the letting yourself and save on fees? Do you live locally to the house? Does it need a lot of work to be presentable and fulfill legal requirements for renting out? Are there a lot of potential tenants in the area- students, professionals? The main advantage of letting it out would be to preserve your asset, maybe to sell in the future eg to boost a pension.in the short term it is unlikely to make you money as a rental property.

[whataboutbob]

Mummy sorry for your experience ,it sounds horrendous. Property can be so stressful.

[Sunnyshores]

Property investment is generally a good idea, however not every property is a good rental property. £300pm sounds a low rent, what is the property worth?

You need to work out the yield, to see if its better than the interest% you're paying on your mortgage or the interest you could get in a savings account.