Is Selling Your Cairns Home Your Best Option?
9/08/2016 11:49:54 AM
Is selling Your Cairns Home Your Best Option?

If you have been thinking of selling your property but are not yet sure if this could be a wise decision for you, there are several factors to mull over and one of those could be renting the property?
 
There are advantages to renting over selling, particularly if you think that you may not be able to achieve the sale price you want in the current market. 

“Whatever the reason, it’s beneficial to go over the pros and cons of selling or renting and this article should help you with your decision making”

By the way please be aware not all properties may be best suited to becoming “your” investment property. By consulting with a professional property expert, they can help you determine if your property ticks all the boxes.

The advantages of renting can include the ability to:

•Use rental income to help cover your monthly mortgage other expenses

•Take advantage of negative gearing tax breaks (you can actually claim your tax credits in advance)

•The Cairns property market has not shown much growth since 2008 and you may choose to keep your home as an investment while you wait for the market to improve. Keeping your rental long term helps you build equity allowing you to possibly purchase another property with the equity built..

If you didn’t purchase your property specifically for investment purposes, it’s important to consider how you and your family will feel about this decision. You’ll have to come to terms with another party treating your home as their own. This is one of the potential downsides of renting your home, so it is something to think about before signing any contracts.

Tax Responsibilities and Considerations

It’s a common misconception that all rental properties pay for themselves. Before you jump into the rental market, it can be helpful to sit down for a discussion with a local real estate agent to find out what realistic level of rental income could be expected. 

If you’ve only owned your home for a short period of time, the rental returns may not exceed your monthly expenses. This doesn’t make your property a bad investment, but it may not be the solution to all of your financial needs either.

However, there are distinct tax advantages to owning an investment property. Those who have significant equity in their homes may not benefit from these same tax advantages. Again, you may wish to have a discussion with a real estate agent before you decide whether renting your home is financially feasible for you. 

It’s important to remember that short term real estate markets can experience temporary ups and downs, and that property investment tends to be best for individuals with a long term goal in mind. Over time, good capital growth can help make up for any short term losses.

New home owners can claim deductions for out-of-pocket expenses, including repairs, cleaning services, depreciation of fixtures, and mortgage interest payments. Many homeowners will want to find a property manager to help them with their rental. This offers numerous benefits, and property management fees can also be claimed as out-of-pocket expenses.

Qualities and Responsibilities of a Landlord

Choosing to rent out your property brings with it a set of responsibilities and tasks that must be completed. You can hire a property management company if you don’t have the time or inclination to perform these responsibilities, which could require a significant amount of time and skill. These include:
•Managing tenants
•Advertising vacancies
•Collecting rent
•Following up on late rent payments
•Understanding tenancy laws
•Maintaining and repairing property

Renting your property also carries with it some element of risk, in the event that your property is damaged by bad tenants. Many property owners choose to take out landlord insurance to help protect against this risk. 

Hiring a property manager to take care of these tasks is also common for property owners, who don’t wish to be inconvenienced with constant calls from tenants. If you’re interested in renting your property as a purely financial endeavor but don’t want to deal with day to day management, it’s definitely worthwhile to consider enlisting a property management company.

When It’s Better to Sell

Choosing to rent out property is not always the right decision for every individual. Sometimes it makes more sense to sell. This is something you may wish to consider if you:

•Are interested in a short term investment
•Need equity from your home
•Don’t wish to follow up on maintenance and repairs
•Don’t have the cash required to support two properties

If you’re on the fence about whether it’s better to sell or rent your property, you could benefit from a consultation with a real estate agent. They can help go through the risks and benefits of each option in your particular situation. 

With your income, assets, and risk as factors to consider, this can help you reach a decision about the best possible scenario.

This could be the biggest financial decision you make on behalf of your family and if you feel you need professional help contact the team at Bragg Real Estate today to have all your questions answered by a professional property expert.

Also if you need help doing the sums, Bragg Team member Terry Loftus can run your numbers through a cash-flow analysis to determine how much (or little) it may cost to keep your current property.Feel free to call Terry now on 0412472172 to discuss further.

# If you are considering the option of renting we would also encourage you to speak with your mortgage broker/bank and your accountant to ensure the best structure is put in place to suit your individual circumstances. 

Bragg Real Estate cannot and does not make any guarantees about your ability to get results through a property investment process. Nothing on this page, any of our website, or any of our content is a promise or guarantee of results or future earnings.