Is renting out property worth the effort?
Over the past few weeks, the topic of whether to keep properties that they are renting out has been raised by our clients. Many of you have really seen the benefit of building up property portfolios – they have assured you of an ongoing income in retirement.
I am noticing, however, what I call the “hassle factor”. In the past, you may have had abundant energy and received midnight calls about burst geysers and rogue DSTV aerials with a degree of equanimity. Now, these minor irritations can morph into monsters.
My own experience bears me out. I recently sold my two townhouses, purchased as an investment, because I was not as cash-positive as I had thought. With the increasing cost of
rates and levies, I had to recognise that the rental return did not warrant holding onto the properties.
A client I was chatting to this week had just sold eight townhouses, saying: “I just want to get my income paid to me, not to have to worry about what is wrong with the units. I have so many other things I would rather be doing.”
I have another client whose four townhouses are fully paid up. She makes a reasonable monthly income from the rental, and does not find the arrangement at all onerous. Of course, should this change at any time in the future, she can simply sell her properties and benefit from the proceeds.
So, I am not giving advice to sell property. I am saying that the principle of “serve me or harm me” applies. It is useful to conduct a simple exercise: look at what interest you might be making if you sold the property and invested the money.
Juxtapose this against your rental income minus all your expenses. Of course, you also need to take into account if there is any hassle in owning rental property. If so, rather come in and meet with us in a life planning meeting and make an informed decision about whether the bother is worth the returns.
A point to note is that all investments with us are invested in property in order to make sure that your investments are diversified.
Grasp every opportunity to live hassle-free!