Sydney PPOR: Sell or Rent

Hi all,

New to this forum but already came across some great info just reading a bunch of threads. Thanks in advance.

Hoping to get some advice on either renting out or selling an OOC property in Sydney.

• Bought a property in 2011 and being hands on, spent many hours renovating to the point where the place is now fully renovated.
• Currently like most Sydney siders, mortgage is high but manageable
• If I sell I can probably walk away with aprox. 1.3mil going on conservative/flat market pricing.
• If I rent out I can conservatively secure around 450pw positively geared income

Income is okay across the family at around 180k.

The reason for selling is probably more emotional in that, like all things you spend too much time with (except your wife .. she made me type this) you start to tire of it. Maintenance is also fairly high on the property (lots of trees, lawns etc) and working long hours plus weekend maintenance on the property is getting old quickly.

I've also got significant savings to the tune of 200k-250k (how's that for an accurate budget) tied up in renovations in the house. I don't necessarily need to free that up but from a cash flow perspective it limits options to invest elsewhere.

My first preference is renting it out (good long term investment, 1050sqm in premium suburb) but the necessity for us to stay in Sydney (work purposes) means either renting ourselves (possible but hard to swallow) or buying a second place (mortgaging yourself to the hilt for a dump) I'm struggling to see how I can make this work unless moving out to the sticks. (Curse you human nature for wanting it all!)

Selling and buying another place where I can add value with my skills is an option, and something I would be happy to do. Assuming I can stomach the waste on agent fees and stamp duty on the new place.

The main objective is, although the capital growth in the property plus value added with reno's has been extremely positive, it does feel like you stagnate.

Question is, if you were in my position how would you play your hand? Thanks for any advice.

 

Happy wife happy life
Whatever creates that scenario

 

agree happy wife happy life

 

Hi Jason98 and welcome.
From reading your original post it would seem that you are "getting over" the time outlay to continue to maintain your current PPOR. If you were to either sell or rent am I correct in thinking you would downsize to a more manageable property?
Could you not downsize, pocket some money and invest in other areas? Just trying to think outside the square.

 

Selling seems to make sense because,
$450 a week seems low relative to the value of the property
Property is older and requires high maintenance, either you pay for others to do this or run the risk of the property becoming run down
No tenant is going to look after the property as well as you do.

Maybe good to sell while the property is looking its best.

Or simply stay there if you are happy and need to stay in Sydney, but hire a mower man or gardener to take care of most of the outdoor maintenance, especially if you can see the property increasing in value over the coming years.
Marg

 

We went through a phase where for our PPOR we would renovate/sell/trade up to the next one without that pesky CGT so I quite like this strategy. We'd probably still be doing it but we funneled all our capital into scaling up multi-site developments.

You need to make sure the value proposition / margin is there with whatever you're looking to buy in a quiet market though to make sure you don't buy a project that won't reward you.

Is the rental yield going to justify renting it out? If you're renting in the same area / same type of property as you own then presumably that would just be a neutral move finally?

 

The $450pw was, as I understood it, to be what was left over after rent collected less mortgage repayments, not the actual rent.

 

Yeah, I cannot stomach them, which is why I am a 'buy & hold, never sell' type of investor.
In your position I'd consider keeping what you have and borrowing against it for a deposit on another that you can also add value to, through renovation........and repeat, but keep them all. (greedy I know)

 

Hi @Jason98

Sounds like you need a new start in a new place.

I feel there may be a few competing commitments here:

• The existing property is a large block of land, in a good suburb, and may provide good long term prospects
• Paying agent fees and stamps in the process of you upgrading
• Not wanting to borrow further

You mention you have a good sized mortgage - is there a possibility if you moved from this place to another place, it will assist you in having a lower mortgage, given the value you have added to this place?

How comfortable are you renting vs living in your own home? How will that feel like?

 

There are a handful of reasons to sell, but a truckload of reasons not to.

 

Spot on Taj, that is probably my preference at the moment, if I sell (or rent) I would opt for something a lot more manageable elsewhere.

 

Correct

 

That would be my preference if the second place didn't have to be in Sydney, maybe something like Adelaide or Brisbane where you still get value for money. Realistically with some rental returns on the old place and mortgaging up for a second what do you ultimately buy in Sydney for around 1mil that a family of four can live in .. not much.

 

Are your skills (Wife and yours) not transferable to another state or region?

 

Definitely possible to significantly lower the mortgage. Happy to rent for a while as it means a break from all the maintenance and renos.

You are right, conflict between not wanting to part with a real good property for the sake of an easier lifestyle.

 

Is it just a money issue? You could just get someone to maintain the trees etc. also, theres no investments anywhere in all of this.

 

Perhaps in a few years but for the next 18 months minimum we are Sydney bound.

 

Selling and buying again will take a huge chunk of money.

Why not outsource the maintenance if that is the main worry?
Marg

 

Agree - get a gardner.

 

Agree it'd be ideal to hold - however you'll very quickly hit a serviceability barrier in this lending environment.

If there is enough margin in the project it then that makes more sense than holding an asset that doesn't have a capital growth outlook or decent yield (like Sydney property at present). Surprised how many are scared off on the "principle" of incurring buying/selling costs. Let the numbers do the talking!