Switching from Selling to Renting: Worth the house listing shift?

If you're thinking about selling your house, you might want to consider the option of renting it out instead. With the current state of the real estate market, switching from a sales listing to a rental listing can be a smart move that can yield significant financial benefits. Not only can it help you generate a steady stream of passive income, but it can also provide you with the flexibility to sell your property in the future when the market conditions are more favorable. In this blog post, we'll explore the advantages of switching from selling to renting, and why it might be a worthwhile shift for you to make.

Finding the purpose in selling your house

Before selling your house, it's important to identify your reasons for doing so. The motivations behind selling can vary greatly from person to person, with some selling to make a profit, others needing urgent cash, and some aiming to purchase a new property. If you don't require an immediate lump sum, renting out your home can be a viable option to generate a steady monthly income for a limited period. However, if you require a large sum of money for other purposes, it may not be wise to rent out your property as it could take up to a year to become vacant. In such cases, selling the property is a better option to obtain the lump sum you need.

Moving Out: Permanently or Temporarily?

Are you considering a permanent move away from your current location? If you have plans to return in the future, renting out your home could be a wise decision. Renovation and improvement costs are the only major expenses, and renting it out provides a steady monthly income. When the time comes to return, you can move back into your home. Plus, the property value may have increased by then.

Alleviating Tax with Short-Term Rental Listings

If you've owned a house for less than 5 years, selling it incurs a 3.3% business tax. To save on costs and earn rental income, consider renting it out until you reach the 5-year mark before selling.

Renting out for a new House Purchase: Is the rental income sufficient for the new house down payment?

When purchasing a new house, the foremost expense to consider is the monthly mortgage payment. It's crucial to also assess if renting out your old house can cover the payment for the new one. If the rental income and your salary can't fully cover the new mortgage, selling the old house to fund the new one may be the better option. This way, you avoid potential problems in the future.

For example, if your new house payment is 25,000 baht per month but you can only rent out the old house for 9,000 baht per month, plus your own salary which only covers 10,000 baht per month, so it may not be worth it.

Location = Increase in Value?

If you notice that an area has the potential to become more valuable in the future, for example with the construction of a new railway line, road expansion, or the opening of a large shopping center, these factors could contribute to an increase in the selling price of homes in that area. During the waiting period for property values to rise, renting out the property and waiting for the area to fully develop before selling may be a smart move.

Is the location suitable for renting out?

Before deciding to rent out your property, it's important to consider whether the location is suitable for renting. This is determined by the demand from renters, which can be observed by looking at nearby rental properties. If rental advertisements have been up for several months without any interest or if rent has been lowered multiple times without success, it may not be wise to rent out your property as the location may not be desirable. In such cases, it may be more beneficial to post a sale advertisement instead.

Are You Willing to Devote Time?

At this stage, it may seem like renting out a property is a lucrative option, but it also means taking on more responsibilities. Homeowners may encounter issues such as damaged property, leaky roofs, no running water, and power outages, which can become a burden. In addition, tenants may have different habits, and some may not pay rent or create continuous issues that require regular monitoring. If you are not prepared to handle these challenges, selling the property may be a better option.

Conclusion

In conclusion, deciding whether to sell or rent out a property is a complex decision that involves considering various factors. While renting out a property can generate steady income, it also requires the homeowner to take on the responsibility of maintaining the property and dealing with tenant-related issues. On the other hand, selling the property can provide a lump sum of money but may not offer long-term financial benefits. Ultimately, the decision depends on personal preferences, financial goals, and the current real estate market conditions. It's important to carefully weigh the pros and cons before making the final decision to switch from selling to renting, or vice versa.

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