Are you relocating for a job opportunity?
Upsizing?
Looking for a change of scenery?
Or are you taking an extended holiday trip?
Are you unsure whether to rent or sell your home, and what is the best in terms of your financial situation?
Although there is no solid answer for whether you should sell or rent your house, however, you will need to form a strategy and weigh up your monetary outcome if you were to either sell or rent your home. The first step is to figure out what your property goals are, research and plan a budget.
Some considerations to keep in mind:
Is there a rental demand in the local market? What rental return would be achievable?
Firstly, you should research your local area and analyse the rental potential of your home by comparing your property to those similar situated nearby. For example, within the past 12 months, advertised rental prices have surged at an all-time high whilst seeing that vacancy rates are at their lowest point, making more demand on rental properties, thus driving the rental market price to increase. In this current market, your rental yield will be at its optimal, thus making your property a worth-while investment if you were to lease to tenants.
Budget- Which option leaves you financially healthy?
Secondly, you will need to determine if there will be a positive cashflow. Creating a budget plan will allow you to see the expenses required in selling or leasing your property.
In leasing, expenses can include mortgage repayment, taxes, landlord and building insurance, unforeseen maintenance and repairs, property management fees, marketing, and possible vacancy. However, tax deductions will allow you to claim rental costs against your taxable income.
If you do plan on renting your previous home and buying another, you will need to consider your borrowing capacity, if your bank will approve a loan for two properties and if you have enough equity to pay the deposit for your second home within the lending policy.
Emotional Connection to the Property
After budgeting, strategizing, obtaining professional opinion and extensive research, you might have an emotional connection holding you back on making this big financial decision.
Maybe you are seeking a change of scenery, trading up for a more family sized home or moving closer to family and the thought of leaving behind your current home is causing apprehensions. Reworking your mindset will allow you to focus on the end goal and future.
If you plan on making your home into an investment or plan to move temporarily, it can be tough to hand over your home to a tenant and hope that they will take care of it just as you did. However, professionals such as property managers, will ensure that the best tenants are selected, frequent inspections are scheduled, and maintenance and repairs are completed swiftly to keep the condition of the property just as you left it.
Want to crunch the numbers with us to allow you to make a smart decision? For an obligation-free chat, email our Director, Casey Healey on casey@c21newcastle.com.au or phone 02 4928 7400 today or Nicole Hoare on Nicole@c21newcastle.com.au.