Pros, cons of rent­ing out

Lesotho Times - - Cartoons & Puzzles -

WHILE it may never have been your in­ten­tion to be­come a land­lord and rent out your home, there are cer­tain sit­u­a­tions where the need could arise, es­pe­cially if the goal is to hold onto the prop­erty and not sell it.

This is ac­cord­ing to Adrian Goslett, CEO of RE/MAX of South­ern Africa, who says 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. Dou­ble house pay­ment is 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, he says. 2. It’s bet­ter to have some­one 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, he says 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 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, says Goslett. 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 Goslett says in the case where a home­owner has re­lo­cated and needs the eq­uity from their pre­vi­ous home in or­der to pur­chase another, rent­ing their home out will not be a fea­si­ble op­tion. 2. A ten­ant could make it 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 buy­ers to view the prop­erty, he says.

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. Goslett says 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 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, he says.

He says 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 says. — Prop­erty24

There are def­i­nitely ad­van­tages to rent­ing a dam­aged prop­erty.

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