Selling house or renting it out

[Maruska]

Hi

 

I have a tough decision to make and I am hoping I can get some input from people that have been through this. We got our visa at the end of November and we are planning to move to Australia around May-July 2014.

We had a plan of renting out our condo in Houston and then sell when it appreciates ( we bought in 2006, shortly afterwards the market crashed, now we might have a chance to get about the same amount of what we paid for it). I`ve recently been in touch with property management agent and a realtor and it looks like it makes more sense to sell.

 

pros as I see it:

 

1) we won`t be tied to a property on the other side of the world, dependent on the fact that our property manager is doing a good job

 

2) we will have some spare cash after everything is paid off - not much but still something

 

3) we aren`t planning to come back to Houston in the future so not a home that we would want to come back to later

 

4) our HOA fees just went up again, now 400 $ a month

 

5) we would still need to invest about 7-8000 $ a year ( not covered by the amount of rent) for HOA payment, property management fees and if anything broke and needed repair, the rent would basically only cover the mortgage

 

 

cons:

1) I expect that the condo will appreciate ( but it was expected last year already, so far it stays the same). We could wait and see but at this point we are ready to move and don`t really want to hang around to see "if" the price might go up.

 

2) We are in our mid 30`s and it doesn`t feel very good at all not to have a property, we will be renting in Australia for at least a year. We have some savings but it just feels insecure

 

3) If we rent it out and sell it after more than 2 years, there would be a significant capital gain tax we would be required to pay ( we are exempt if we lived in the property for 3 in the past 5 years)

 

 

I don`t know, in a nutshell, I am worried that paying up to 80000 a year is way too much if the appreciation is uncertain. On the other side, it was our first home that we owned - for both of us - so I guess the value we see in it is rather sentimental.

Any opinions are welcome and appreciated.

[flybyknight]

if you are coming over on a PR visa you can also claim flights back to the place your house is periodically for maintenance visits.

you can only claim the % you were actually working on the property, but it's better than a kick in the pods.

 

7-8k isn't much for a good geared investment, how much is that as a percentage of the house valuation?

If your career here supports it, it may be worth keeping it as an investment.

 

you should be critical with the house though, look at it from a renters perspective, is it in a good location for schools transport etc.

try not to let your fondness and memories affect the decision.

[Maruska]

if you are coming over on a PR visa you can also claim flights back to the place your house is periodically for maintenance visits.

you can only claim the % you were actually working on the property, but it's better than a kick in the pods.

 

7-8k isn't much for a good geared investment, how much is that as a percentage of the house valuation?

If your career here supports it, it may be worth keeping it as an investment.

 

you should be critical with the house though, look at it from a renters perspective, is it in a good location for schools transport etc.

try not to let your fondness and memories affect the decision.

 

 

Location is great, we are right at the Texas Medical Center where the biggest employers ( hospitals ) are so lots of healthcare professionals and medical students in our complex. We are zoned to an excellent public elementary school as well. However, there are plenty other condos, apartments and townhouses in the area. HOA is going up every 6 months now, we are paying 400 $ a month now. Mortgage is 1350/mo. We bought it for 166000, we might be able to sell it for the same price now, 8 years later :wacko:. I dare say we would be able to send 8000/year to the US but what if the value sits at the same point for the next 5 years? Every single year since 2011 there were articles claiming property value will go up and it didn`t, really.

[flybyknight]

oh medical! have a look inside the hospital, there may be signs around the place for rented rooms, you could get an agent on board to run it and rent individual rooms to medical staff or students.

this will give you a better rental yield, however wear and tear may well be a bit higher. the other great thing is if someone moves out the rent doesn't stop, it only reduces slightly.

we have a place we do exactly that with and it does ok. we're making about 40% more than we would renting it as a normal place. it could close that 8k gap you're speaking of.

the agent will have a bit, but with the higher yield he's worth his pay for the peace of mind, its effortless.

[VERYSTORMY]

It is always a hard one. I think there is a risk in assuming it will appreciate in the next 12 months. I am sure you are aware how the area is geared to the oil game and the forecasts for the pil price next year are not great!

 

I can understand how not having your own place makes you feel insecure - I hated Oz because of it and didn't settle until I had a place.

 

My advice would be to rent it short term - 6 months to ensure you feel happy in Oz and then sell.

[robfromdublin]

Look at it from an investment perspective. $8k a year is acceptable if you are expecting $20k a year in capital appreciation. Otherwise if you are paying $8k a year and getting nothing in terms of capital appreciation then why would you invest in property like that? If your money can earn more elsewhere then get it out of property investment.

 

Obviously if you want a place of your own to come back to if Oz doesn't work out then keep it, but that is a lifestyle decision, not an investment decision. You need to decouple the two.

[Maruska]

Appreciate the advice guys :yes:. As for us wanting to come back, that`s a 100% no-no. Even if, for some reason, things didn`t work out in Australia, we wouldn`t be heading back to Houston but more likely somewhere along the west coast.

The property management agency takes first month`s rent ( about 1500$) and 15 % of rent every month afterwards as a fee.

I am just worried that we`ll sell and it will appreciate next year and we`ll be kicking ourselves. We bought for 166K, 1 year later it was worth 140K, now slowly climbing but we`ll be lucky if we get the 166K back. :wacko:

[RioMarina]

Hi

 

I have a tough decision to make and I am hoping I can get some input from people that have been through this. We got our visa at the end of November and we are planning to move to Australia around May-July 2014.

We had a plan of renting out our condo in Houston and then sell when it appreciates ( we bought in 2006, shortly afterwards the market crashed, now we might have a chance to get about the same amount of what we paid for it). I`ve recently been in touch with property management agent and a realtor and it looks like it makes more sense to sell.

 

pros as I see it:

 

1) we won`t be tied to a property on the other side of the world, dependent on the fact that our property manager is doing a good job

 

2) we will have some spare cash after everything is paid off - not much but still something

 

3) we aren`t planning to come back to Houston in the future so not a home that we would want to come back to later

 

4) our HOA fees just went up again, now 400 $ a month

 

5) we would still need to invest about 7-8000 $ a year ( not covered by the amount of rent) for HOA payment, property management fees and if anything broke and needed repair, the rent would basically only cover the mortgage

 

 

cons:

1) I expect that the condo will appreciate ( but it was expected last year already, so far it stays the same). We could wait and see but at this point we are ready to move and don`t really want to hang around to see "if" the price might go up.

 

2) We are in our mid 30`s and it doesn`t feel very good at all not to have a property, we will be renting in Australia for at least a year. We have some savings but it just feels insecure

 

3) If we rent it out and sell it after more than 2 years, there would be a significant capital gain tax we would be required to pay ( we are exempt if we lived in the property for 3 in the past 5 years)

 

 

I don`t know, in a nutshell, I am worried that paying up to 80000 a year is way too much if the appreciation is uncertain. On the other side, it was our first home that we owned - for both of us - so I guess the value we see in it is rather sentimental.

Any opinions are welcome and appreciated.

 

As far as I see it this is not an investment just bad debt. I would sell, pay off my debts and move on. My only concern would be entering an Oz market that is probably 4 times as expensive as Houston.

[Gbye grey sky]

My rule of thumb would be.....would you buy it purely as an investment? Obviously factor in the costs of purchase would be nil as already owned. Compare with other investment options with the cash that a sale would release. We are planning to sell when we go as no intention to move back to the same house. Owning an investment property on the other side of the world is a headache we can well do without on top of everything else. Also selling it at a distance later doesn't appeal.

[Maruska]

As far as I see it this is not an investment just bad debt. I would sell, pay off my debts and move on. My only concern would be entering an Oz market that is probably 4 times as expensive as Houston.

 

That is our concern too. However, before we bough the condo, we were preapproved for a loan up to 360K, we just didn`t feel like spending that amount on a big house and have nothing left for vacation and leisure stuff. We are both in the medical field and we make decent salaries. As I look at realestate.com.au, I am realizing how cheap Houston is :laugh:

[Maruska]

My rule of thumb would be.....would you buy it purely as an investment? Obviously factor in the costs of purchase would be nil as already owned. Compare with other investment options with the cash that a sale would release. We are planning to sell when we go as no intention to move back to the same house. Owning an investment property on the other side of the world is a headache we can well do without on top of everything else. Also selling it at a distance later doesn't appeal.

 

Definitely something we have to think about as we don`t have family here in US and we aren`t planning to come to US for vacation either ( planning to see Grand Canyon, the last place that we wanted to visit bud didn`t manage to yet, just before we leave).

 

[Phoenix16]

I think you need to wake up and smell the Perth roses....,.

[Phoenix16]

2 Drs! Would think the world is at your feet, don't believe for a minute that's true!! I know loads earning far more than a GP or DR can ever imagine who struggle xxxxx

[Maruska]

2 Drs! Would think the world is at your feet, don't believe for a minute that's true!! I know loads earning far more than a GP or DR can ever imagine who struggle xxxxx

 

Nope, a nurse and a nurse educator :biggrin:

[Chortlepuss]

I would sell. Don't forget you'll be taxed on rental income in Australia. We kept our house in UK and have been lucky with tenants but it is not worth much more than when we moved over in 2007. We intend to return there and didn't want to be out of the market (we rent in Oz). What friends have done here in Oz is purchase a property here on a buy to let basis, and rent the property they live in. This way they can live where they want whilst owning property. Negative gearing means this works well for them financially

[Guest]

I am just worried that we`ll sell and it will appreciate next year and we`ll be kicking ourselves. We bought for 166K, 1 year later it was worth 140K, now slowly climbing but we`ll be lucky if we get the 166K back. :wacko:

 

I don't think you should think about it like that as you have no control over the increase or if it will even happen. I think you need to focus on the here and now and what you do know, not what *might* be.

 

Also I see nothing wrong in being mid 30's and renting for a while in a new country. Pretty much most people migrating will rent for a while till they find a job, area they like and so on. It all takes time.

 

Personally if you have no plans to return to Houston to live I'd sell up ASAP and be done and move on.

[NicF]

Agree with Snifter. Sell before you leave. And don't look at house prices in Houston after you move and you won't know if you could get more anyway.

 

Sometimes we just have to do things now because now is the right time even though it might not be the best time. We moved our money over from the UK when the exchange rate was pretty poor, but we needed the money at that point to buy a block of land. We could have left the money in the UK for a year and got an extra 0.4 dollars to the pound (quite a big difference when moving nearly £150k) but we wouldn't have got the block of land on a street we love and built the house to suit us. While it wasn't the best time to move money due to the poor exchange rate, it was the right time for us.

[Maruska]

Ok so we did some more number crunching and decided to sell :biggrin:. Thank you all for your input, it`s been very helpful. Everything opens next week and we are going to contact the real estate agency on Monday. NicF, this is exactly what my husband said, that if we sell it, we should never look again at the prices in case they went up :laugh:. It feels good to have made a decision this important, now we just have the smaller things to worry about such as shipping ( boxes only) and furniture and baby stuff sale :biggrin: