Ask Greg – August 2012
Greg will answer your real estate questions!
Q:We are on the move interstate and wonder whether we should rent out our house or sell it?
A: The first thing you need to do is to assess the local rental market – if there are dozens of rental properties just like yours unoccupied, adding your property to the list is probably not a good idea. Likewise, you should establish if suitable rental accommodation is available in the area you are moving to. If it is in short supply, then buying there may be a better option.
When any move is likely to be a long term one, most people will sell their home. After all, it’s usually a necessary step in affording to buy a new home.
Sometimes would-be sellers simply can’t sell at a price acceptable to them, so they choose to hang on to their property, in hope of eventually selling once the market has picked up.
This strategy can work, but only if a number of things line up for you – namely, a manageable mortgage on that property, a competent and supportive managing agent, good tenants, minimal need for repairs and the future boom times you had hoped for.
If one or more of those things don’t eventuate, there can be a real domino effect.
Holding onto a property can come at a substantial cost. If there is a shortfall of rental income against mortgage repayments and regular repairs or maintenance required, you can quickly fall behind. Add to this Council rates, insurance, wear and tear and property management costs and the amount you are investing every year while you wait (fingers crossed) for the market to reach the price you want could be significant.
I’ve seen a lot of people make really good returns when they invest in property for the longer term and are comfortably geared financially.
Be careful to do your sums and avoid throwing away money while you live in hope of boom times around the corner.
Answers are general comment, and readers should always seek their own independent professional advice.
Send your real estate questions to firstname.lastname@example.org
Greg Trembath is Principal/Licensee at Greg Trembath Real Estate.
Licensed Real Estate Agent – Licensed Auctioneer.