WHAT’S BETTER? A BIRD (PROPERTY) IN THE HAND, OR TWO IN THE BUSH?
“I’m looking to upgrade to a bigger home for my family. Would I be better off renting out my current modern home for $250,000 at $300 per week, or should I sell it and buy two cheaper houses for $150,000 each. These would rent at $150 to $200 per week and would be older houses.”
THERE ARE MANY DIFFERENT FACTORS TO CONSIDER
Nathan says, he doesn’t know the finer details of your situation. The location of your property, as well as your financial position and goals are important things to consider when making this decision.
It seems you have one property worth $250,000 and are in a position to move upwards.
If you sell and buy two properties for $150,000 each, you will have a $300,000 holding with a similar rental return.
THE COSTS OF BUYING AND SELLING
It is important to remember that there are many costs involved in buying and selling properties. If you sell your current one, and buy two others, you will be hit with agent’s fees, legal fees, stamp duty and bank fees.
This may chew up quite a chunk of your capital.
IS YOUR CURRENT LOCATION GOOD?
If your current property is located in an area that is not likely to go backwards in value, and has potential to grow over the next few years, you may want to consider holding onto it.
It has gotten you to the position you are in today, and most likely has a fairly neutral cash flow compared to most investment stock on the open market today.
WHAT WOULD NATHAN DO?
Personally speaking, what Nathan would do in this position is hold onto the current property. This would mean he wouldn’t have to spend big on fees while continuing to take advantage of the property’s neutral cash flow and location (if it is good).
MAKE SURE YOU TALK TO THE EXPERTS
In any case, it is important to have a detailed discussion with the experts before making your decision. A property investment expert and a good financial planner can help you weigh up the pros and cons against what is happening in the market. This can help you decide the most beneficial path to choose.
Have you reached a position where you want to move up but don’t know how? Please share your experiences in the comments section below.