Author Topic: Keep or sell property in Sydney, Australia  (Read 1759 times)

kimmyR

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Keep or sell property in Sydney, Australia
« on: May 03, 2017, 06:22:10 PM »
Hi there
I'm a newbie to the forum.
I'm oscillating between keeping and selling a 2 bedroom property I own in Sydney's inner west suburbs, about 8km from the CBD in a suburb that has seen very cosmopolitan and demographic changes over the last decade.
I purchased the property in 2009 for $500K with a 20% deposit. It was pretty much a dump and I did a quality but basic renovation in 2013/2014 and have spent approximately $150,000 on it all up (the back half of the house was decrepit and we had to demolish it and rebuild, plus we made other improvements such as adding attic storage, built in wardrobes etc). We didn't go up a storey, as is popular at the moment in this area, because I was afraid of overcapitalising.
Anyway, fast forward a couple of years since the renovation, and extremely similar 2BR properties in my suburb are selling for crazy prices - in the range of $1.3m to $1.5m (and I have seen some over this price and the mind boggles). My current mortgage balance is approximately $300K. That is, there is a possibility of a gigantic windfall if we sell.
What I am interested in hearing are opinions on whether I should keep or sell the property? I'm a little concerned about the market bubble in Sydney. We are also thinking of moving next year to a much lower cost of living area in regional NSW to be close to family in any event. I am thinking we could realise the equity, purchase a lower cost home outright and have a significant amount of money to invest in a managed fund. However, one of my partner's arguments in favour of keeping the property is that once the mortgage is paid off, we would have a rental income from the house in retirement.
Interested to hear some thoughts!

alsoknownasDean

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Re: Keep or sell property in Sydney, Australia
« Reply #1 on: May 04, 2017, 02:44:52 AM »
With the difference between selling your house in Sydney and a regional NSW house, you could buy another house or two in regional NSW outright for that rental income. I suspect rental yields in Sydney are shocking because everyone's speculating on the capital gains.

Fresh Bread

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Re: Keep or sell property in Sydney, Australia
« Reply #2 on: May 04, 2017, 04:48:16 AM »
What are similar 2BRs renting for in your area? If you make $1m from the sale and invest it in an index fund with a withdrawal rate of 4% you'd have 40K pa for retirement. If you keep it, you'd need $770 a week before any management costs, insurance, repairs, council tax. As an example, my investment property rents for ~42k pa but has costs of ~10K excl mortgage (includes strata fees so hopefully yours wouldn't be quite that high). You have to think about long term gains too if retirement is quite far away - I think most people would say that the stock market would be better bet, even compared to a house in Sydney.

I am selling up right now, but since it's an investment property I'm about to pay a whole lot of capital gains tax. After all the fees, other sales costs and that tax, my retirement income will still be higher if I sell up and put the money in a fund than if I keep it. Assuming people are still buying a few weeks from now... We are retiring soon and we have somewhere else to live so it's an easy decision for us. If no-one buys it then we'll just rent it out again, with nice new paint and carpet ;)

I'd get an appraisal and run the numbers.

marty998

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Re: Keep or sell property in Sydney, Australia
« Reply #3 on: May 05, 2017, 06:45:46 PM »
Hire a good rax accountant. I hope you kept all receipts and records from the renovation too.

The difference between good and bad records here could be tens if not hundreds of thousands in CGT if you decide to sell.


Fresh Bread

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Re: Keep or sell property in Sydney, Australia
« Reply #4 on: May 05, 2017, 07:12:43 PM »
Hire a good rax accountant. I hope you kept all receipts and records from the renovation too.

The difference between good and bad records here could be tens if not hundreds of thousands in CGT if you decide to sell.

It's her PPOR as I understand it, so no tax if she sells now.

OP - if you do move out and rent it, get a proper valuation done as you'll need it later for CGT. If you rent in the regional area you might be able to avoid CGT if you sell in the future because you can say it remained your PPOR and you were temporarily relocated. You'd have to check on the requirements on this.

Sydneystache

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Re: Keep or sell property in Sydney, Australia
« Reply #5 on: May 07, 2017, 05:41:24 PM »
Keep it, rent it if you move to a regional area. You never know when you would need to return to Sydney, whether it be for health, education or "I need a dose of the city" reasons.

marekstachura

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Re: Keep or sell property in Sydney, Australia
« Reply #6 on: August 22, 2017, 12:14:11 AM »
Keep it on rent. Renting income is monthly income which helps you a lot to pay your extra expenses or you can you loan installment if you take a loan to buy a new house.  After a long time, if you think that there is no need to get back to Sydney then sell it with a higher price.