The Mortgage Supply Co | 18 Jun 2019 | First Home,Mortgage Tips,Sell Your House,Renting

Moving on from your First Home, can you rent it out?

The Mortgage Supply Co | June 18 2019 | First Home, Mortgage Tips, Sell Your House, Renting

Moving on from your First Home, can you rent it out?

buy or rent

We often talk about buying a house, but today let's discuss selling and renting. 

If you own a house already, you might be wondering, "Should I sell or rent my house?" 

And the answer is - it depends. There are pros and cons of selling your house as well as renting it out which we'll discuss in this article.

Rent out your house if:

1. The price of your house is expected to soar

If you're living in an area where house prices are on the rise, then you might want to stay the course and hold on for a while.

But don't just sit there waiting for the prices to rise. Think about new ways of adding more financial value to your property right now; the best way to do it is renovation. Even small things like a new coat of paint or changing all the sinks and taps can wow the potential buyers in the future.

Read more about the renovations that are bound to increase the value of your home here.

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2. You're relocating temporarily 

If you're heading off to a short holiday with your family or relocating somewhere else temporarily, and you intend to come back home, it could be in your interests to retain the property.  Your finance might need adjusting to suit this situation.

Renting out your house in such situations gives you a steady source of income until you figure out your next move. 

3. Renting brings you a profit

"I'll rent out my house and make a lot of money easily, right?" Well, not quite. If you don't handle your finances well, renting might slowly drain your cash.

Although you'll make money when your tenants pay you the rent, some expenses will still come out from your pocket - insurance, repairs, maintenance, and the mortgage, obviously.

This is the rental yield, does the yield (income vs expenses) meet what you require?  Lets discuss.

4. You're equipped to handle the challenges of being a landlord

No one knows what the tenants will do in your house. You might get the good ones who respect your property and pay rent on time or you might get the ones who turn it into a nightclub.

You can be the property manager for your own investments, this is a great way to reduce your costs, it will increase the time you have to spend organising maintenance, advertising for new tenants. handling tenant inquiries etc.  

If this is your first investment property and you have had no prior property management experience, it might be in your interests to engage with a property manager, by proxy you will gain this experience.  It is then up to you when you feel you could comfortably take over and be the property manager.  Or you may want to retain the manager.

1. You're mentally ready to take the plunge

Let's face it, it's not easy to sell your first home. You'll realise this when you put that "For Sale" sign in front of your house. Not only this, but you'll need to be available to show the house to potential buyers and negotiate the price, which can be stressful at times.

2. Keeping your existing home (renting it out) and using its equity to help buy your next

There are specific lending rules that the Reserve Bank has imposed on investment properties and owner occupied properties.  

If you are in this space contact us, we are able to give you what is available in your current position and what options you have at this time.

3. Being emotionally attached to your first home, then using it as an investment.  

When you rent out your house to the tenants, for all intents and purposes it's theirs for as long as they live there. You need to be okay with the fact that the only time you're allowed to visit your own house is during the house inspection.   

Being overly attached can put you in a difficult space as a property manager, there maybe tension if the tenants do not live up to your expectations.  In this space having a property manager could be the option.

4. You're moving far away

Heading overseas? According to the Residential Tenancy Act, you must appoint a New Zealand-based agent to manage your home if you're leaving the country for more than 21 consecutive days. If you fail to do so, there maybe a fine. 

Sometimes renting out your property is spot on and sometimes, it's better to move on to new beginnings. So before you make any decision, it's best that you seek advice from an expert to avoid future headaches.

But in the meanwhile, here's something that won't cost you a dime. Our free Your Home, Your Mortgage Guide - get it now, it's free.

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