There is, of course, no single right answer, yet given the varied life situations a landlord may find themselves in, some sound advice can still be offered.
While the Danish prince Hamlet in William Shakespeare's famous play asks “to be or not to be”, flat owners often ask “to sell or to rent out”. And it is an absolutely fundamental question to which there is no universal answer that works for everyone. That is why we have prepared this text outlining 5 situations in which it may be a good idea to put your flat on the market, as well as 5 cases where it will definitely be better to keep it and consider renting it out instead. The final decision, however, is up to you!
5 situations when selling may pay off:
- Realising a financial gain
The most common reason is of course obvious: you are selling because you simply want to raise money. But watch out – don't forget the new conditions for tax exemption when selling a property! The so-called time test has recently been extended from 5 to 10 years, for properties acquired from the beginning of 2021.
- Trading a smaller property for a larger one
A very valid reason for selling an investment property may also be that you are looking for something bigger. Or perhaps for a flat closer to the city centre, and therefore of higher value. In such a case it may pay off to arrange the exchange directly in cooperation with an estate agency, as this makes it possible to minimise transaction costs.
- The chance to diversify your investment portfolio
Property carries a low level of risk, which for some investors may be a negative argument. If they are lucky (or have a really good analyst who hits the bullseye), investing in the stock market or cryptocurrencies can rapidly multiply their spare funds. Or lose them even faster. That is simply how markets work.
- Avoiding the cost of renovations and repairs
Anyone who has ever owned a property knows very well that occasional worries and repairs are hard to avoid – it simply comes with the territory (or the property management company Flat Service takes care of everything). But in some flats the actual and functional lifespan of certain elements is already on the edge, and it may be easier for the owner to sell the flat as it stands than to arrange a refurbishment that is demanding both financially and mentally. The new owner, in turn, gets the chance to set everything up exactly as they wish. A classic “win-win” situation.
- Emotional release
This may sound a little out of place, but in our experience it is often true: people associate properties with specific experiences, memories and emotions. And sometimes on a far deeper level than they consciously admit. For some owners, selling a property acquired through inheritance or a divorce settlement can therefore be a way to genuinely start a new chapter in life and leave the “emotional baggage” behind.
For some owners the thought of a refurbishment can be daunting, and selling is a convenient alternative for avoiding the ordeal with tradesmen.
5 reasons to rent out instead:
- Steady passive income
Do you like the idea of enjoying a regular income in retirement, sipping cocktails with little umbrellas in the Caribbean while your money earns for you? Then definitely don't sell – on the contrary, buy as much as you can. The bigger the portfolio, the bigger the income and the fewer worries about your family's financial future.
- Property value growing over time
As a general rule, property represents one of the most stable investments. Of course, circumstances may arise that turn this time-tested rule on its head, but in our part of the world that is rather unlikely. Especially in large cities, it can be expected that property values and demand will keep rising in the future as well. A property therefore earns twice over: through the rent and through its growing value.
- Protection against inflation
What is the best way to fight inflation? Become part of it! It may sound absurd, but the fact is that housing prices tend to follow the macroeconomic inflation curve. So you will have no trouble finding a tenant who will sign an inflation clause (you can read how to do it in our guide) setting out a regular increase in rent in line with current data from the Czech Statistical Office.
- Secured housing for your children
For many of us, children are the most precious thing we have in life. And we have to admit that the growing gap between average incomes and property prices may mean that in future our children will not be able to afford a home of their own, even on above-average salaries. That is why flats that parents buy for their children and hand over to them, usually when they start university, are one of the most valuable assets. Until then, the property can be rented out and the income can fund hobbies, clubs and other activities.
- The option to move back in
For many people an investment flat is a kind of back door, a safe haven they can return to if something happens to their current home or if, for example, their relationship breaks down. If the flat is currently empty or you have a fixed-term contract with your tenant, it is of course that much easier.
Renting out doesn't have to mean needless worries
Have you already decided whether you plan to put your empty flat up for sale or keep it and collect rental income every month? If you choose the second option but are worried about administrative hassle, the time it takes and regular questions or complaints from tenants, consider using the property management services of Flat Service. That way you get a regular, secure rental income completely free of worries. Our two options, Flat Service Partner and Flat Service Garant, cover the full range of needs, and clients also appreciate our portfolio of additional services – for example preparing tax documentation for the tax office. If our offer has caught your interest, do get in touch and let us prepare a no-obligation quote for property management services with a stable rental income.
