We make decisions – sell it or rent a property? It’s fair to say that the real estate market can sometimes feel like a minefield.
Everyone has their own advice, but what’s good for your situation may not suit the next person at all. This blog will highlight a few key considerations when deciding what to do with your existing property when it’s time to move – sell it or rent it.
Think with your head, not with your heart
This step is easier said than done, but it is critical to making wise and informed financial decisions. First, take a step back and try to understand why you’re considering your options.
We often see couples who have lived in the same property for many years, wanting to downsize and keep their existing home as an investment. Their family grew up at home and they have strong ties in the area. But when we come to the bottom of why they consider sticking to the family home in the first place, the reasons are much more emotional than financial. This is dangerous territory that can lead to bad financial decisions.
On the other hand, a number of circumstances can lead homeowners to decide to sell. Without proper market advice and a thorough understanding of their individual financial circumstances, this may not be the right decision either.
Basically, knowledge is power, and the right information can do wonders for your financial decisions. It is best to consult a real estate specialist in your area to help you make the right decision for your situation.
Take into account your cash flow
It’s true that sticking to an investment property can give you an injection of your financial situation in the future or result in significant tax breaks, but what about your cash flow in the meantime? Maintaining your management situation is often a very viable financial decision.
If your investment depends on the forecasted rental income (which is often the case), many factors can influence this income. It is important to consider issues such as cost of living and running, possible corporate costs and local government rates depending on the property, or what if the property is empty for some time for any reason.
All of these things can affect the profitability and manageability of your investment.
The investment itself
Ask yourself why did you buy your home at all? For most people, buying a family home is not just a financial decision. Most people consider the neighborhood, the location of family and friends, school, work, etc. While these things can affect the investment potential of your home, most of the time they don’t. This means that by selling you can theoretically direct your money towards a property with much greater investment potential than an existing home.
On the other hand, if you have strong, credible information (and not just a hunch) that an area is geared towards amazing market growth, then the benefits of turning your home into an investment can certainly outweigh the risks involved.
Are you more confused than ever? Here are our most important considerations when deciding whether to rent or sell an existing property:
- Always, always, always ignore emotions when making decisions.
- Understand your own financial situation like your own pocket.
- Know your market and consult a professional.
- Check all your options before you exclude anything.
- Could you please see how you move back into the property in the future?
Whether you want to rent, sell or buy, you can consult us today. Our agents help you make the right financial decisions for the future.