Should I rent my property instead of selling?

When a sales market dips or when there is chatter in the press about a property market bubble about to burst, we on the rental market are quick to know about it. During the fall 2008 was the first time we at Residensportalen experienced this phenomenon. Right before and after the recession was a fact, we got bombarded with listings from desperate sellers that now needed a plan B. Unfortunately, we are seeing the same trend now (fall 2017) with an alarming amount of properties coming in to us to rent that have experienced difficulty on the sales market. Therefore, we decided to compile a how-to guide based on our experience from 2008 so that you can better navigate renting your property out instead of selling. Our tips:

  1. Speak to your bank immediately
    Even though you do not want to sell in the existing market, your bank may feel differently depending on how high your mortgage is on this property and the one you may already have purchased. In 2008 many listed their property, found a tenant only to be told by the bank that they had to sell at any price due to the internal rules about correlation of income/assets and mortgage level. We noted that SHB and SEB were tougher last time and that Swedbank was more liberal on this issue. The bank also has the right to veto a sublet if they deem your mortgage is too high in relation to the property's value.   

  2. Set the right rental level
    2008-2009 we saw many to do a copy and paste of their mistake on the sales market by essentially not heeding market signals and listing their property much higher than the rental market allowed. Unfortunately many are in the same boat when a real estate market is shaky so there will be more competition on the rental market as well. More supply on the rental market therefore means it is more critical than ever to list your property at the right level.   Fresh statistics on brokered rental properties in Stockholm.

  3. Make a decision
    After having spoken to the bank and you have decided to try the rental market, pull back your listing from the sales market. The corporate agents looking for houses are quite savvy and when a market is shaky they cross reference our listings with Hemnet. If they see a property listed on both markets, they become wary and recommend other properties to the employee that they are relocating.  Ask your sales agent if you are allowed to use the photos they took for your rental ad and you will be one step closer to finding a tenant. 

But, there is always a sunny side of the street and an upside to this situation that you have found yourself in. Those property owners that decided to rent their properties instead of selling them in 2008 came out on the other side as huge winners since after the dip, prices continued to increase. Some of our landlords actually continued to rent out their second home, having seen the upside of being a landlord. Don't hesitate to reach out to us if you have questions, we are quite proud of our long experience and having weathered one recession we gladly will share our experience and lessons learned with you.