Australians are considered one of the world’s most mobile populations. Over 40 per cent of us change addresses every five years, which is about twice the global average. We relocate for various reasons: better job prospects, changes in income, a desire to be closer to loved ones—the list goes on. Primarily, though, most people move homes simply because their needs are no longer served by the one that they currently live in. It’s simply something that happens naturally as they go from one phase of life to the next.
The dilemma for the homeowner, then, is figuring out what to do with their property when they move on to the next one. Because every situation is unique, there’s no right answer to whether it’s better to rent the place out to someone or to sell it off entirely. In either case, it’s best to work with a real estate agent to get the best results. But before you hire one, read on to learn about a few of the factors that you should consider before making this pivotal decision.
You Should Rent Out Your Home If…
There’s a High Demand for Rentals in the Area
Rental demand can vary from market to market. Generally speaking, it tends to be high in urban areas, upscale areas, around colleges or universities, and in neighbourhoods that are seeing plenty of new development. It can also rise in places that are seeing a spike in job growth and real estate development. In all of these cases, you can expect a steady stream of short-term as well as long-term renters, which means that your property won’t be left sitting idly for too long.
You’ve Always Been Interested in Owning a Rental Property
Most people wouldn’t volunteer to be someone’s landlord if they can help it. Looking after property and making sure that everything in it is up to snuff for the tenant can be a bit of a hassle, to say the least. However, if you have a passion for service and are genuinely interested in becoming one, then perhaps renting your property out can be a good experience.
Additionally, turning your home into a rental will allow you to build wealth and save up for your retirement. If you keep it well-maintained, tenants simply won’t have much of a reason to call you. This should help you spend more time with your family and do the things you enjoy most while still doing work that is both productive and rewarding.
You Have an Emotional Attachment to the Home
Sometimes, circumstances may force people to move out of a home that they really love or have formed a sentimental connection to. If you find yourself in such a situation but find yourself unwilling to part with the property, you may consider renting it out. This allows you to maintain ownership over the place and still earn money from it in the meantime.
You Should Sell the Home If…
It’s a Seller’s Market
In a “seller’s market,” there is a high demand for homes, but there aren’t enough of them to go around. This simply means that should you decide to sell your property and market it well, you have a good chance of selling it well. If the market is really hot you may be flooded with offers—enough to start a bidding war.
Why is this a good thing? Having multiple interested parties means you can maximise the value of your home and selling the property at a much higher price than you expected.
You Need Cash on Hand ASAP
Renting a property out only makes sense if you have enough funds to pay for its upkeep, taxes, and other fees. It’s not the best idea if you’re still paying off the mortgage on the place and will have to spend money out of pocket while it’s vacant. If you need more funds to finance your move, selling the property may also be the better option.
Essentially, it all boils down to how financially well-positioned you are. Experts recommend having at least AUD 13,000 in discretionary income for those who want to rent their homes out. It’s simply safer to sell if you’re short of that number.
You Have No Interest in Being a Landlord
As above, being a landlord isn’t for everyone. While the steady cash flow can be nice, not all people have the temperament to attend to tenants’ demands or keep up with a property’s maintenance needs. If the worst comes to the worst, it’ll also be on you to evict problem renters who may be behind on their payments. You’ll also have to deal with the damage left behind by any careless tenants. If the prospect of shouldering these responsibilities does not appeal to you at all, then selling the property outweighs the income from renting it out.
Though some people might think that the argument between renting out versus selling all boils down to simple math, the fact of the matter is that things are hardly ever that straightforward. Discussing your situation with your financial advisor, and your accountant is advised. and homeowners who are still trying to choose between the two should carefully weigh their options before committing to a decision.
Should you rent your house or sell it? If you need advice, Get in touch with Gerard Partners today!