Selling or Renting? How to Decide What’s Right for Your Property
For many property owners, there comes a point when an important question needs to be answered: should I sell, or should I keep the property and rent it out?
It might come up when you're moving into a new home, relocating interstate, inheriting a property, completing a renovation or simply reassessing your financial plans.
There isn't one answer that suits everyone. The right decision depends on your individual circumstances, the property itself and what you want to achieve over the longer term.
At MIX Property Group, we work across both property sales and property management, so we can help owners look at both options objectively. Here are some of the key things worth considering.
1. What could your property sell for today?
Understanding your property's current market value is a good place to start.
Consider what similar properties have recently sold for, how much equity you have in the property and what you would be left with after selling costs and any applicable taxes.
Sometimes a strong sales result can provide the capital needed for your next home, another investment or a different financial goal.
For other owners, however, selling isn't necessary to achieve their next step — which is where exploring the rental option can be worthwhile.
2. What could you realistically achieve in rent?
Before deciding to sell, it's worth knowing what your property could generate as an investment.
A rental appraisal should look at comparable properties that have recently leased, current tenant demand, the property's location, presentation and features.
You can then consider the likely rental income alongside expenses such as loan repayments, rates, insurance, maintenance and property management.
The important figure isn't simply the weekly rent — it's how the property is likely to perform as an investment overall.
3. What are your longer-term plans?
Your timeframe can make a significant difference.
If you believe you'll need access to the equity in the property relatively soon, selling may make more sense.
If you're comfortable holding the property for a number of years, retaining it could allow you to benefit from rental income while maintaining exposure to any future capital growth.
Property should generally be considered as part of your broader financial position rather than simply asking, "Could I get a good price if I sold today?"
4. Is the property well suited to becoming a rental?
Not every home requires extensive work before it can be rented.
Often, relatively simple improvements can make a significant difference to tenant appeal and the rent achievable.
Fresh paint, flooring, heating, window furnishings, garden maintenance and addressing minor repairs can all improve presentation without requiring a major renovation.
Before spending money, however, it's worth getting advice. We regularly see owners considering improvements that may not materially increase the property's rental return.
Understanding what tenants in your particular market value can help you spend money in the right places.
5. Consider the costs of both options
There are costs associated with selling and with retaining a property.
Selling may involve marketing, agent fees, conveyancing and potentially tax implications.
Keeping the property means considering management fees, insurance, rates, maintenance, loan costs and periods of vacancy.
Rather than looking at one cost in isolation, compare the overall financial position of each option.
Your accountant or financial adviser can also provide important advice around tax, capital gains and how retaining the property may affect your individual financial circumstances.
6. What is happening in your local market?
The sales market and rental market don't always move in the same direction.
There may be strong buyer demand for your particular type of property, making it an attractive time to sell. Alternatively, strong tenant demand and limited rental supply may make holding the property particularly appealing.
This is why current, local information matters.
Looking at recent comparable sales and recent comparable rentals gives you a much clearer picture of the opportunities available.
You don't have to decide before asking for advice
One of the biggest mistakes owners can make is assuming they need to decide whether they're selling or renting before speaking with an agent.
You don't.
In fact, understanding both scenarios first can make the decision much easier.
At MIX Property Group, our sales and property management teams can assess your property from both perspectives. We can indicate its likely sale price, expected rental return, current buyer and tenant demand and any improvements we would recommend before taking either path.
Our aim isn't to tell you that you should sell or that you should rent — it's to give you the information you need to make the decision that's right for you.
Not sure whether to sell or rent?
If you're weighing up your options, we'd be happy to prepare a complimentary sales and rental appraisal for your property so you can compare both possibilities side by side.
Get in touch with the MIX Property Group team for a confidential, no-obligation discussion about your property and your next move.