Ask An Adviser - Should I Sell or Rent Out My Investment Property?

Top answer provided by:

Matt Hale

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Hi Craig,

Funnily enough, I am in a similar position right now. Our tenant is moving out, and I am tossing up whether to rent it out or sell our place.

The most important thing is to work through how this decision impacts your overall plan.
If you haven’t spent time being clear on your goals, make that the priority. Then decide on whether to hold or sell your property.

One of my colleagues, Rebecca Pritchard, has put together a short video outlining how to best tackle goal setting… I hope it helps.

Here is the framework I am using, before deciding what to do with our property;

1. Be clear about why I am considering selling; write it down. Then reread it after the next three steps.

2. Before the recent change in circumstances – was my plan to hold it long term or sell when the time is right? This is important to consider, as short term issues can often create an emotion that makes us deviate from our long term plan.

3. Know my numbers on both outcomes;

a) If I sell, what sales costs & tax will I have to pay - & what will the sale proceeds allow me to do?
    In my case, it would allow me to reduce my home loan (some non-deductible debt).
b) If I hold onto, what will that mean? You have to consider the time without rental & then also
    cashflow consequences. Other items that can impact the outcome are whether you need to spend
    any money shortly, and also how likely is it that you will get good tenants in the current market.

4. Do some research on the area your property is – are there any reasons why you should consider selling?  
    Or is it likely a long-term growth area?
    If you aren’t sure how to do this, spend some time asking a few local real estate agents their opinions, or a property advocate.

Once you have completed those steps, take some time to reflect, and be patient with your decision.
If you can’t come to a definitive decision, lean on this quote from famous economist Gene Fama Jr “Your money is like soap. The more you handle it, the less you’ll have.”

Good luck, Craig, and wish me the same as I work through the process and come to a decision.

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Article by:

Matt Hale

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