Would you sell your rental property if approached with an offer?

Faith

If someone offered to buy your rental property from you right now, would you consider selling it? I'm thinking either your tenant offered to buy, or you were approached by someone opportunistically looking for a quick sale. What factors would you consider?

3DataModem

Yep, but at a premium to its market value (not a discount).

At the moment the [reduction in mortgage per month] > [net cashflows per month] so it is profitable on paper (even if negative from a cashflow perspective)... then once the mortgage is clear I have an free cash generating asset.

The net present value of all of that is way higher than [current market value] - [current mortgage] ... if that changes I might consider it, but having a free cash inflation-proof income generating asset in perpetuity in 10 years is very very valuable to me and my dependants. Unlike a pension annuity it doesn't die with me.

JeffKenna

All depends on the price.

PhilOssophy

This is not a question which can be answered with a 3 option poll.....unless you tell us the other 50+ considerations. E.g. price offered, income, annual costs, location, and so on.

banie01

JeffKenna wrote: »

All depends on the price.

Agreed.

The fact it's a rental is really irrelevant.
It needs to be weighed against the asset's current performance.

A rental property that is performing, that is covering its costs and even in the current market is still somehow an appreciating asset?
One would have to be in need of immediate liquidity, rather than it being a measured decision.

To dispose of a performing asset?
I'd need to be offered quite a premium tbh.

Xterminator

If you run your rental property as a business, tehn the decision is a business one, return on investment, effort required to be a landlord, & risks involved etc. so its an equation where you compare returns and risks of keeping vs the offer you received.

if its you have an emotional attachment, like the old family home etc, and you want to keep it in the family then monetary reward isnt your goal.

JimmyVik

I know several people who have done just that recently.
Legislation and risk, especially what other crippling legislation might be around the corner, were the main factors for them.

I was looking at buying an investment property it for a few years but decided not to in the end (risk/reward).
I had left the capital in ETFs while i was making that decision and when i decided not to go ahead, just left it there.
Best decision I ever made.

Samuel T. Cogley

If I could get the price I want for it (c. 20% over market value as it stands) it'd be gone in a heartbeat.

Gumbo

It would have to be an attractive offer.
I currently have a HAP tenant since 2015. No issues, no hassle and I haven’t had a missed payment since the commencement of the rental agreement so I’m lucky.

I have no reason to sell as it’s currently paying for itself.

Faith

Would it change anything if the property was vacant for a while and you were having trouble attracting new tenants without either dropping the rent or putting a decent chunk of money into house maintenance/repairs/cosmetic upgrades?

Caranica

Nobody here has mentioned capital gains tax yet? That would be a significant factor surely?

Samuel T. Cogley

Caranica wrote: »

Nobody here has mentioned capital gains tax yet? That would be a significant factor surely?

Wouldn't think so for accidentals caught during the last boom/bust.

JustAThought

Samuel T. Cogley wrote: »

Wouldn't think so for accidentals caught during the last boom/bust.

I guess people would factor their costs and tax liabilities in, along with variables such as buying out a variable or losing a tracker, and income projections.

beauf

Faith wrote: »

Would it change anything if the property was vacant for a while and you were having trouble attracting new tenants without either dropping the rent or putting a decent chunk of money into house maintenance/repairs/cosmetic upgrades?

Thus far it would seem the owner is not really interested in money if they are not doing anything with it.

Caranica

Samuel T. Cogley wrote: »

Wouldn't think so for accidentals caught during the last boom/bust.

A property beside me was bought for 120k in 2010, sold in the autumn for 300k. Rented for 5 years. That's a sizeable CGT bill.

beauf

They have almost 200k to pay it though.

Gumbo

Faith wrote: »

Would it change anything if the property was vacant for a while and you were having trouble attracting new tenants without either dropping the rent or putting a decent chunk of money into house maintenance/repairs/cosmetic upgrades?

In Dublin, close to major shopping centre and direct Dublin bus to O’Connell street in 20 minutes. I don’t think a vacant property is of concern currently. Not for the foreseeable anyway.

Caranica wrote: »

Nobody here has mentioned capital gains tax yet? That would be a significant factor surely?

I bought at the height of the boom (after selling an apartment at the height also) so I don’t think my property will ever reach the price I paid for it. It was my PPR for 10 years also but not accidentally a LL. It was a choice when buying our current home.

I think I’ll avoid the CGT trap luckily (if that’s any joy to come out of buying in 2006!)

Gumbo

Caranica wrote: »

A property beside me was bought for 120k in 2010, sold in the autumn for 300k. Rented for 5 years. That's a sizeable CGT bill.

Could only be half the rate of it was rented for 5 out of the 10 years they owned it.

3DataModem

Gumbo wrote: »

Could only be half the rate of it was rented for 5 out of the 10 years they owned it.

CGT on a non-PPR property is for the full period, whether it is rented or not, I believe.

ted1

Caranica wrote: »

A property beside me was bought for 120k in 2010, sold in the autumn for 300k. Rented for 5 years. That's a sizeable CGT bill.

53k, so they still walk away with a good bit of capital gains+ whatever has been paid if they’re mortgage in 11 years

beauf

Faith wrote: »

If someone offered to buy your rental property from you right now, would you consider selling it? I'm thinking either your tenant offered to buy, or you were approached by someone opportunistically looking for a quick sale. What factors would you consider?

You're asking basically if you put in a low offer how likely would it be to succeed. Very unlikely, but not impossible is the answer.

Prices are going up not down. But it's not impossible someone might just want rid of it.

Faith

beauf wrote: »

You're asking basically if you put in a low offer how likely would it be to succeed. Very unlikely, but not impossible is the answer.

Prices are going up not down. But it's not impossible someone might just want rid of it.

Not necessarily, but also not totally incorrect :pac:

I do have my own reasons for starting this thread, obviously, but I'm also just generally curious about the broader attitudes of landlords.

That being said, my reason for asking (and I'm explaining only for context, not because anyone can predict the actions of anyone else!) is because I'm looking to buy in a stagnant market. While waiting for a house to come up, I viewed a rental property nearby. Structurally, it's a lovely house in a relatively* good location (*in a rural town, so lacking all city amenities and little-to-no public transport), but the upkeep of the house was terrible. It was only built about 20 years ago, so unlikely to be a long-standing family property, and looked like the furniture might have come from a charity shop 20 years ago, tbh. Lots of cosmetic upgrades were required, and there was obvious issues from the past tenants indicating a lack of care on their part. It has been empty for at least 2 months now, probably because the rent is too high and the air of neglect is obvious.

It's the kind of place I'd buy and put money into, but not rent. I'm not suggesting I'd low-ball the sellers, but the owners don't seem very interested in the place either. They're letting through an agent, who suggested that he could just ask the owners if they'd be willing to sell. I would never have thought of asking if owners were willing to sell a rental property, and then I got curious about what the various factors might be that would influence a decision like this.

Gumbo

3DataModem wrote: »

CGT on a non-PPR property is for the full period, whether it is rented or not, I believe.

If it was a PPR for 5 out of 10 years of ownership, then 50% of CGT owed is what my accountant told me. It’s pro rats basically.

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