Thinking of upgrading to a bigger home, but can’t decide if you should sell your current property, or rent it out as an investment property?

WA has just recorded the strongest rental expectations in Australia for the next 2 years, according to the 2019 NAB Residential Property Survey, coupled with the lowest vacancy rate in six years. So if you can afford to, now is a great time to upgrade into something bigger, and keep your current home as an investment property.

“Provided you can afford it, you could make yourself an extra $40,000-$60,000 more, if you hang onto your home and sell in the next two to three years, thanks to the state of the WA market and economy.” – Brendan Leahy, CEO of Naked Edge Real Estate

Hear Brendan’s top #3 considerations to help you make the best decision for your situation…

1. Can you afford to keep your home as an investment property?

If you do decide to rent out your home, you will still have your usual rates to pay, plus ongoing maintenance and repairs. With a rental, hot water systems can fail, and air conditioning systems may need work. So provided that these costs won’t stretch you too thin, I would recommend holding onto your home for another two years or so.

This is because the core fundamentals (namely commodity prices) are in place for the WA market here to have some significant gains over the next couple of years. Keep in mind it is a different case over on the east coast. The market over there has slowed down – and I think it still has some slowing down to do.

WA is a mining state, and we’ve recorded strong iron ore price exports of $100 per tonne for the last six months, and based on WA treasury estimates, with every US$1 increase in the iron ore price, WA receives an extra $81 million.

The AUD exchange rate is helping as well, each time the Aussie dollar drops by just one US cent, WA’s royalty income is expected to jump by $101 million.

2. Can you afford to upgrade without selling your current home?

Ideally, the choice to maintain your property and rent it out will still allow you to upgrade and afford the home you want. Sometimes by selling the property you could borrow an extra $100,000-$200,000… so maintaining your home and renting it out may reduce that capacity.

But you might find you can still afford the home of your dreams in that price point. It is a buyer’s market at the moment, which is great for upgraders because house prices have dropped far below home values – and this market will not last long. There are homes in the Perth hills that were previously worth $900,000+ now available for $650,000.

It’s a great time to see what’s around, and speak with your lender to see what you can afford. The cash rate is also at an historic low of 0.25%, so it’s an opportune time to get your finances in a position to upgrade, and secure some long-term capital growth.

3. Is being a landlord for you?

If you find you can afford to keep your home as an investment property, consider whether you have the time, patience, and desire to manage your rental yourself, or if you’d like to hire a property manager to do it for you.

Some of the most important tasks of a landlord (or property manager) are:

• Finding a reliable tenant that pays rent on time and maintains your property.
• Collecting and lodging the correct tenancy bond with WA bond administration.
• Conducting regular routine inspections on the property.
• Organising prompt maintenance and/or repairs on the property.
• Ensuring all legal paperwork and documentation are filled out correctly and signed (e.g. tenancy agreements, property condition reports, inspection reports, repair requests etc).

If you work full-time and have a family, you may find it difficult to give your tenant and rental the time and commitment it needs – it totally depends on your circumstances, and headspace.

If you’d like more information on how a property manager can help you protect your investment, feel free to get in touch with our sister company, We Love Rentals on (08) 6254 6300. They only do property management, and have 10+ years experience in the industry.

And if you’d like a second opinion about whether to sell or rent your property in the current Perth market, feel free to call Brendan on 0439 998 867. He’d be more than happy to answer any questions you may have.

There is so much to consider when choosing a real estate agent to sell your property. There are many agents to choose from and it can be confusing when you try to compare different commission rates, marketing plans, personalities and selling price recommendations. Some would argue that the most important factor is to choose an agent who is active in your local area. An agent’s local knowledge and expertise will often sell a home faster for the best price possible.

Here are just some of the advantages of using a local agent:

Know the Suburb Well

An agent who is selling homes in your suburb or a neighbouring suburb should know all there is to know about the area. Buyers can ask all sorts of questions from the local bus route, the number of primary schools, the high school boundary, local shopping centre expansion plans or road changes. An agent who can talk with authority about the suburb will be able to give the prospective buyer more information and hold a conversation for longer.

Value of the Home

If an agent has sold the house across the road, the one down the street and over the back fence there is a good chance they know what price point to market the home. An out of area agent can look up the selling prices of the homes but they won’t have been through previously sold houses to know how they really compare to the current listing.

Testimonials

When you use a local agent you can ask to see all their testimonials from past clients who also sold in the area. Reading testimonials can give a seller the peace of mind and confidence that their chosen agent will achieve the best possible outcome.

Database of Prospective Buyers

An agent with other listings in the suburb will meet buyers at other home opens. A buyer will often say that the property they are viewing isn’t quite right because they are looking for a particular feature or size. A good agent will take a note of this and if your property is a match, they can make contact with the prospects and invite them to view before the house is even advertised.

If you would like to find who the Naked Edge Real Estate local area specialist agent is for your area, check out our Suburb Profiles. And for more tips on making a decision on your real estate agent, download our comprehensive, free guide – How to Choose the Right Agent, found on our Blog.