Downsizing & renting out previous home

Hi guys,

Ok after a bit of advice, I currently have a large house 6bed, in rural wa. Am currently looking at renting out and purchasing a smaller house to Reno/ updo. Due to work commitments we have to stay in the area, but really have no need for such a big house now the kids have gone.

Of course it's not the right time etc to sell and we were previously looking at an IP although not in the area we are located, so this changes things slightly.

The area has a lot of regeneration going on, with the update of the current mall and a new one being build, both of which will be close to the potential new property.

Having spoken to RE there should be no prob renting out either at a later date should we want to and the rent from one will more than cover the small mortgage on the other.

Has anyone done this? Is it financial suicide ?
We do have another property in Perth also which we need to leave as is ATM.

The property clock is suggesting the we are either near to bottom or just off bottom 5/6 which is the trend for Perth no data for rural. The "new " property will be a short term stepping stone so not nec looking for our new future home.

This is purely a lifestyle choice/ change as I don't want to clean 6 bedrooms anymore!!

Are we better off waiting ?

As all my properties have previously been out of necessity am happy for any advice/criticism as you are far more knowledgable than I am lol

 

Since no one else has responded I will give you my 2 cents.

I personally if I had to (or want to) move into a small one and we were at the bottom of the market is rent out the house.

Yes the 6 bed house might not yield all that well but you never know, however the money you will make is GCT free so if the boom comes $$$ and if it doesn't it probably didn't cost you much as the 6B house probably paid for the rent (and more) over the smaller place.

The cost of selling and buying is really expensive and if you were looking at this you will likely lose a lot more money than just 100 p.w. from getting a lesser yield.

My parents for example are thinking of selling and if the right price came they would sell. They have already gotten their next place but have it rented for the time being. If the right price came and the tenants were still in their new place they would go and do a 6 month lease in a normal/cheaper house as the rent they are getting from the unit is probably 3x what rent they would need to pay for the cheaper house.

 

Try again with a paragraph or a comma.

 

Thanks Big Will

 

If it is in Perth, and you can get rent for the rural place without too much drama, and buy another place while things are depressed, that is probably exactly what I would do (except I would rather be on rural in large house)

But why do you have to clean all those bedrooms if no one is in them to mess them up and get them dirty ?

I had someone talking to me about a similar thing recently & they are not that inteersted in teh investing side, just the maintenance, I suggested staying put and use a budget to get someone else to do the things they no longer want to, plus it would be very hard to go from space to cramped, noisey suburbia IMO

 

Thanks Geoff, I couldn't edit the original

 

Downsize in your present home.
Chuck out everything you would toss if you were moving somewhere smaller.
Completely empty four of the six bedrooms.
Clean thoroughly, shut the windows and doors of those 4 rooms.
Pretend they are not there except to maybe vacuum every 6-8 weeks.
If more than one bathroom, close up the extras.

Enjoy your "new" 2 bedroom house!
Marg

 

Hi dabbler,
Thanks for the input, we would be staying in a similar area - so still on a large block just something a bit smaller. So not quite suburbia slightly closer to town also. We travel frequently and like the idea of able to have something we can lock and forget with not too much drama.

 

I have actually done that already, when the kids moved out ! There are 3 bathrooms although only 1has a bath so we still end up using 2 - the house is a long ranch style config so we literally only use a small part down one end. Just seems a waste

 

Offer the other rooms on Airbnb... it will involve cleaning. But the rooms won't be wasted.

 

Re: Airbnb: I think @Countrynoob can try it for a while.... if she doesn't like it she can stop doing it. If she wants to block dates off in her calendar so to ensure noone stays she can do that.
She doesn't have to accept every enquiry and every booking request if she doesn't want to.

I think it's a decent alternative option to moving. Most guests are really good.
Her household decision though.

 

Hey guys - yes I am a she Interesting points raised by @wylie will need to def give this all some more thought, DH says no to the whole air BnB scenario,

 

Well, if that is the case, and your just trying to get closer to town with a smaller place to look after, and it is not investment per se, then......

I would look closely, if I did this, will I likely be gaining much ? (Capital Growth wise that is)
Do I intent to go back to the original place ?
Would I do better to just sell up, buy exactly what I want located where I want, then take any leftover to invest elsewhere where it may do more work for me.

What I am saying, is there is no point holding onto something that won't perform well, there are costs to holding & there is the pain of dealing with tenants, if it does not have town water and sewer that would also concern me.

If it is a growth area or has a history of doing well, then it could be a good thing, look at Terry's tips on main residence and 6 year rule, get some paid advice too before doing it from someone really cluey.

Also the AirBNB thing has tax implications, income tax, CG tax and possibly other seeing your rural, some may be positive, some negative, IMO it is too much work and too much complication, but on the other hand, if it has a nice outlook and not too isolated, I think it has potential if you want to put in effort.

Decisions, decisions

 

Thanks @dabbler,