Let or Sell

[themba990]

Hi. I'm in need of some advice.
My parents are moving overseas for a period of 4 years. I have the option to move back home and live rent free for the period. The question is what to do with my own house. I like the idea of letting but I have zero experience and I worry that the tenant will not pay me. I could sell, stash the money in a unit trust and buy something later on.
There are two issues I should mention. I bought the house off-plan and moved in 1 year ago and I haven't registered for electricity or municipal rates yet...

 

[saturnz]

Perhaps sort out the administrative issues and sell the house.

I am a major fan of letting, but it has to be a sectional title unit in a good building in the middle of a sort after area.

A house is too much maintenance to rent out and too many things can go wrong.

 

[Bulldog_imported]

I agree, if it's a townhouse you have then it's relatively easy to manage yourself but if it's a house I would let it out through a managing agent for 4 years and let them screen the tenants and take care of collecting the rent. The property is yours so don't sell it, let someone else pay your bond for 4 years. Also staying at your folks' place rent free allows you the opportunity to save some money and take care of any little things that go wrong at your own place for the tenants like a bit of painting or a burst geyser.

Having said this I swore never to be anyone's landlord again after dealing with tenant after tenant of not paying their rent and finally just sold the place but I like the idea of using a managing agent and giving them 15% of the rental income to do the donkey work

 

[themba990]

I should have mentioned the house is part of a cluster that is gated and has about 55 units.

 

[saturnz]

I agree, if it's a townhouse you have then it's relatively easy to manage yourself but if it's a house I would let it out through a managing agent for 4 years and let them screen the tenants and take care of collecting the rent. The property is yours so don't sell it, let someone else pay your bond for 4 years. Also staying at your folks' place rent free allows you the opportunity to save some money and take care of any little things that go wrong at your own place for the tenants like a bit of painting or a burst geyser.

Having said this I swore never to be anyone's landlord again after dealing with tenant after tenant of not paying their rent and finally just sold the place but I like the idea of using a managing agent and giving them 15% of the rental income to do the donkey work

This is the problem, if he sells, he can invest the residual money and earn hassle free returns so the question of returns crops up as it does very frequently in this section. I still maintain buy to let is for tax purposes and not bottom line returns.

A house brings up issues and managing agents generally stop working when things go wrong. So if he really wants to keep a property, sell the house and buy a flat in a sort after area and let that out, returns will be higher and simpler.