To sell or to hold?
Question from Karl updated on 9th February 2018:
We own a tidy two bedroom house in Andy Bay, a sought after area of Dunedin. We've rented it out for eight years, most recently to a relative. They are moving out, so we're debating whether to sell it or to continue to rent it.
We bought it about 10 years ago for $260,000. It's just been valued at $350,000-$370,000. It is also valued at $350-$370 per week for rent. We've been charging $300 rent per week. (This amount currently covers the mortgage - although we are currently paying interest only).We have $200,000 remaining on the mortgage.
We've been told it's a good time to sell, but should we hold on to the property for the long-term? If we do, it may start costing us for various necessary work. Advice please!
Our expert Kris Pedersen responded:
From a cash flow point of view at $350 per week - as long as you can get consistent occupancy and the costs outside of the mortgage are not too high (maintenance especially) - then it looks like it should probably be cash flow positive.
If this is the case, then the only reason I would sell is if you have better places to put the sales proceeds. Keep in mind that you will have to wear sales costs if you do put it on the market. So as long as it is a solid dwelling with minimal upcoming maintenance I'd probably be holding based on what you have said.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz