ASK495: Should I sell or rent? PLUS: Should I buy a holiday property?

0:01Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Welcome to Ask Rob and Rob, the show where we enhance your knowledge of property, all thanks to some brilliant questions sent in by our listeners. We've got another two great ones coming up today, as we do every week. And it all works because you send in your questions and you do it like this. Yeah, you head over to propertyhub.net forward slash ask. There you'll be presented with a wonderful buffet of options. You can ring up and leave us an answer for a message, or you can leave a message on your computer. And if that wasn't enough, you even have the option to try and get your question in the Sunday times by writing in.

0:41Whatever you prefer, it is all in that link, propertyhub.net forward slash ask. All right, let's listen to our first question in, which is from Natalie. Hi, my husband introduced me to your podcast when I was just about to invest in a property course that now seems like a scam. So I really appreciate you providing this information for free every week. We bought our first home four years back during COVID in Hodderston, Broxbourne, when house prices were slightly inflated. It probably wasn't the smartest move, but it suited us at the time. We are thinking to invest money into the property to get it ready for renting so that we can move to the southwest of England.

1:19We would use equity from this property to purchase a new home. I've calculated that rental yields would be around 6%. My husband really believes that over time the capital growth from his property will be profitable. The bank values our property at 440 ,000 and an estate agent values it at 400. We bought it for 392 ,000. The estate agent recommended that we don't sell it at this time. My question is, Do you agree with this strategy or do we sell it, buy our new home in the southwest and use equity from the new property to invest in the north of England where capital growth and yields are better?

1:55My husband prefers the former, but from listening to your podcast, I'm more inclined to do the latter. Many thanks for your time. Natalie, super pleased to hear that you saved some money and some potential heartache by not going down a property course route. there are some good ones out there but there are a lot of sharks and those sharks are very good to present to themselves in a way that makes them seem very legitimate but if people are charging excessive amounts for education and then they sell you more education when you start the education journey be very very careful that's a piece of advice for everyone listening of course natalie was able to avoid that so let's talk about your scenario your situation you've invested in a part the world I know very well, just outside of London, and I completely understand your predicament.

2:41But the good news is, it seems that you can purchase your new home in the southwest of England without having to sell this property, based on what you've said. Now, if that's true, I would hold. I would hold the property that you have for now, because as we've discussed on the podcast at length recently, it's more of a buyer's market than a seller's market. So if you don't have to sell, I wouldn't. I'd hold. Because at some point, the market will go back in your favor, and it'll become an opportunity to sell again. But at the moment, because it's a good buyer's market, you can get a property in the southwest for hopefully a good price and a good deal.

3:19So that's your upside there. But you're not hurt on the downside selling into a market that isn't that favorable at the moment. Now, it goes region by region. But as you are in a commuter area to London, we know that that particular market where Huddleston and Broxbourne is, isn't particularly strong right now. So if you can, hold, wait for the market to improve, and then sell. And also, if you can buy right now, do so because the market is favourable. I appreciate we talk about shiny things like the north of England and the Midlands and all the other places we talk about on a regular basis that look attractive to invest right now, and they are more attractive than the areas that you've discussed but with all the transaction costs involved the fact there's not much equity in the property i still don't think it's worthwhile which you know sounds odd right we say oh this great thing you should be doing but this is proof it's not great for everyone and i love it when we can get into the detail of someone's strategy to give examples of when it's not right for someone and based on what you've said natalie i don't think it's right for you so just be patient sit on it for a while you've still got assets you still we'll see them grow in value over time and with that patience I hope you are rewarded in the near future good luck okay let's hear our next question from Juliette hi Rob and Rob my name is Juliette I'm an avid listener I've been listening to your podcast for about five or so years so thank you very much for all your content I'm in the process of buying my third buy to let property and I just wondered what your thoughts were on buying a holiday only property.

4:54So borrow a holiday rental rather than your standard buy to let. It's not something I have any experience in a holiday only property. So I'd love to know your thoughts on the risks and if there are any benefits at all for that. Thanks so much. Julia, thank you. Thank you for listening for all this time as well. And congratulations on being on to number three. Now, when you say a holiday only property, i'm not sure if you mean here that there's some kind of restriction that means it can only be used for holiday purposes that's unusual but it is something that you see in certain areas so that would mean that you could only use it for holiday let use you may mean that or you may mean just a holiday let where that's the intention where you plan to only use it for short-term lets that first situation if that is what it is is a little bit more risky well quite a bit more risky because you don't have any kind of fallback.

5:44If anything affects the holiday listing market in that area, or you just don't want to be doing that anymore for whatever reason, because it turns out to be more of a hassle than you thought, then you haven't got that fallback of, well, I'll just convert it into a buy-to-let. Because at least with another property where that's just what you've chosen to do, yeah, you might need to make some changes. You might need to change the mortgage product and it might not be the ideal thing to do, but at least you have the option of changing it back into a buy to let if for some reason you need to and you're not able to sell.

6:13If what you're talking about though is that second situation where you are just buying a property with the intention of using it as a holiday let then I think the thing to be aware of it is very very different. I would think of it as a completely different business model from buy to let. They both just happen to involve property. They really are that different. With a buy to let it is of course when things are going well extremely passive if you buy in the right area you've got a pretty much guaranteed source of demand if someone leaves you bring someone in to replace them and you're not going to get rich off the rent but over the long term you end up doing very very well through a combination of the property price going up magnified by the leverage in the form of your mortgage holiday lets i think of more as a business than an investment that's not an official categorization but it's how i think about it because this is more a business where you have to really work for your customers even in an area of high demand there's going to be a lot of competition so you have to work to get your customers in you have to be dynamic with your pricing you have to be really working on getting your occupancy rate as high as it can be because that is the difference between profit and loss and of course there's far more work to be done because you've got people moving in and out all the time and yet you can find agents who can take potentially all of that on for you but even if they're doing it brilliantly and you're never getting involved which I'd say is probably a bit of a dream but even if that does happen what you've got in terms of an outcome is pretty unpredictable cash flow you could be making great money at sometimes and losing money at other times and there's also I would say a lot more risk from various sources so we've already seen recently that there were lots of tax advantages which have been taken away so that was a regulatory risk there's also the risk that trends just change and demand in that area falls that's something we've seen in recent years as well where some areas have been really badly affected because there's a lot of supply, there was a lot of demand, that demand drops and suddenly what are you going to do?

8:01And that's not something that tends to happen with a buy to let. You could have an area that goes downhill but that's going to happen very slowly over a very long period of time. So it sounds like I'm doing holiday lets down and I don't mean to do that, I'm just saying that they are extremely different. So that's a real whistle stop tour of the risks and the benefits. We've got videos about this on our YouTube channel as well, we'll have covered it on episodes in the past so you can go to podcast.propertyhub.net do a search for holiday lets and that will bring up more material there if you want to keep on learning about it because i would say the question here julia is is this right for you and that's something that only you can work out and the best way to work that out is by learning as much as you can so i hope that helps and good luck with whatever you choose to do julia a knowledge bond there from mr rob dicks you should be well positioned to make a good decision from here on in And you know what else is a good decision?

8:51Joining us on Thursday for the Property Podcast. So until that wonderful event takes place, take care, have fun. Bye-bye. Bye-bye.