Rent or sell? The big dilemma for buy-to-let property investors

There are plenty of headlines this week that would put off any property investor with the slightest fear of risk. Having a sensible approach and avoiding panic seems to be the best way to deal with them, according to the forums this week.

There is a debate at the moment among those who invest in buy-to-let in the UK as to what to do about rents and whether to keep renting our get out of the market.

Perhaps the obvious inclination is to increase rents while demand is out there. But there are concerns that tenants, who are cash strapped because of rising fuel and food costs, just won't pay.

{jumi [adcode/adsense-468×60.txt]}

A thread on the singingpig.co.uk buy-to-let forum gives an insight into current thinking. One poster who invests in smaller family homes believes, for example, that despite the economic downturn people are happy to pay a little bit more for a nice place to stay. 'It is a very hard decision for most families to move house to save themselves £50-100 per month,' points out CBS7.

But the reality is that nobody really knows what rental prices are going to do. One investor with 'a property in a good location in London' raises the question of whether to keep renting it out or sell. Seb tells the landlordzone.co.uk forum that he is getting just under 5.9% yield but is worried about the next few years.

Not surprisingly the advice varies from sell now, to hold on as rental demands are high. But this post does get down to some of the essential bottom line considerations that face all buy-to-let property investors. Seb points out that he has taken care of rental but now needs to use a company and that adds to his costs. Also he is wary that with budgets getting tighter, even landlords have to pay extra fuel costs, if the property remains un-let for any period of time then that can be worrying in the current economic climate.

The bottom line is that if he decides to sell he might find a buyer but if they are in a chain it could be some time before a sale goes through. It is certainly a tough question for those in buy-to-let at present.

Whatever the headlines scream it can be worth listening to people in an area where you want to invest to gauge opinions at grass roots level. An example of this gives an insight into what is happening in the French property market on the totallyproperty.com overseas forum.

People actually living and investing in France report that there are wide regional variations in terms of prices and whether they are falling or rising. Reading through the forum gives a potted history of what is happening.

Interesting information includes an indication that even popular areas like the Var are not doing as well as might be expected. A number of British investors are finding that they have either negative equity or a paper profit but no one to sell to.

Although areas like Paris, Nice, and the Cote D'Azur are holding well and although France has not been hit badly by the sub-prime crisis, the housing market is being affected by the general rise in fuel and food prices.

While the jury might be out on France, there is certainly a lot of interest in Germany. Prices are reported to be similar to those in Romania and Bulgaria. Germany looks a safe place to invest in long term according to a number of members on the totallyproperty.com German forum.

For example prices for detached houses in Munich have increased by 8% so far this year. Berlin is also mentioned as worth looking at. Overall opinion is that rental yields are not high but demand for rental property is.

The downsides includes potential difficulties selling property as most people in Germany rent, high taxation and mortgages not as good or flexible as in other countries.