Q. I have just exchanged on a larger family home and was considering renting my current apartment. However, having crunched the numbers and considering the mortgage, service charges and any future maintenance issues along with tax and agency fees etc I have realised that all the rent will cover is the running cost of the apartment, not quite what I had hoped for to be honest. The big question now is do I cut my loses and sell it given I won’t realise any rental income whatsoever for the foreseeable future?
A. Unless you happen to be mortgage free or run into a pot of cash along the way that can reduce the mortgage I’m afraid that you are pretty much in the same position as most investors today, your rental incomes versus your expenses will cancel each other out. This is what we refer to in the trade as ‘washing its face’. I sincerely believe that the goalposts have moved substantially over the years with respect to property investment. Some eighteen years ago when I first got into the business there were investors making a fine return on their properties, hence the demand for so many buy to let opportunities back then and ultimately the crash which swiftly followed the boom of 2007. Back then investors were building up portfolios whilst hanging onto the day job and they were reaping some seriously handsome rewards. Today however we play a different game. Anyone in your position that decides to rent out their home does so not for the short-term rewards but for the long-term gain. Let’s be honest the market is on a serious downturn at the moment and the outlook for the next twelve months doesn’t look very bright. But, and this is a big but, things will only get better. We have faced some serious challenges since the UK decided to pull out of the European Union which has of course resulted in the weakness we now see in the property market. Once the country stabilises again we will see some steady growth, property will always remain the safest place to invest your money, and with that said if you hang on to the property for the next five years at least you may not see any rewards in your monthly profit but when you come to sell I will guarantee you that you will have made a decent return.