Sell, invest or hold?
Question from Janet updated on 20th February 2017:
We live in Hawkes Bay. Because of the hot property market at the moment we are looking at selling our rental property. It is freehold, valued at around $350,000 and returning $330 per week. We are both working and live in a rent free house on a farm.
We are thinking we would like to buy a holiday home in Taupo and rent for casual holiday stays. But we are unsure if this is the best option - or would we be better off putting the money into the bank and getting interest off the $350,000?
Our expert Kris Pedersen responded:
You need to make a call on what you think will happen to house prices over time in the area where your rental property is situated. If it is an area where you are likely to continue to get growth then hanging onto the property seems a better idea. This would mean you avoid sales costs. Also, with interest rates being so low you need to consider that the returns are not likely to be that attractive. On the other hand, if you feel like prices could be about to fall and you are taking more of a short term approach to this then selling might make some sense.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz