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Going Overseas. Rent or Sell?

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  • Going Overseas. Rent or Sell?

    At the end of this year I'm being posted overseas for at least 3 years. The decision I'm struggling with is wether to sell my home or rent it out during my absence! (or some other option????)
    My current property is an old 4 bedroom villa which has been renovated and is on a 1000 sq.m section. In my absence the grounds will require regular maintenance and with old proprties there is always unexpected maintenance requirements. This is the main reason why I question wether I should sell it?
    I'm also concerned that if I do sell it that I'lll be out of the housing market until my return which may make it harder to get back into.

    I'd also like any advice on what benefits/constraint I might run into if I retained investment property in NZ while I'm overseas.

    All and any adivce most welcome.


  • #2
    Unless you need the money rent it out When is NEVER the best time to sell?
    Always!!

    Comment


    • #3
      Just thinking of other options - is purchasing overseas an option for you?

      How much can you rent it for? Take the annual expected rent and subtract off the likely expenses (vacancy allowance, rates, mortgage interest, maintennance, property management, grounds keeping, insurance, other). Does this turn a profit or loss?

      If the property is profitable I'd be inclinded to keep it. If it turns a loss - depending on how much of a loss and what you intend to do in 3yrs selling could be the better option. If you sell then try and sell well in advance - once you get desperate to sell you may be forced to drop your price. If you do start dropping your price - contact me .

      With regards to being overseas: Select a property manager carefully, and if possible have family/friends check up on the place occasionally. A good property manager should look after maintennace for you as well. Post your location and some other PT members could recommend people to you

      Chemill

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      • #4
        Just to add a bit more clarity and to contradict Poomba;

        If your property is looking at posting an annual loss of $5k (for argument's sake) and you are not happy about having to pump 5K into a property - this may be the time to consider selling.

        What about capital gains? This thread has some discussion on where the property market might be heading http://www.propertytalk.co.nz/postt3667.html

        Chemill

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        • #5
          Rent it. If you're intending on returning to NZ.
          I don't know the value of your home but lets say you choose to sell and you choose an Agent - How much would that cost you? Thousands!!!
          Better in your pocket than someone elses.
          If you can afford to keep it, keep it.

          Comment


          • #6
            I left NZ almost 5 years ago.

            I kept my house and rented it out.

            I have also bought 3 more properties while I've been away, during trips back to NZ. I could have bought more, but haven't been quite brave enough to buy one from overseas without actually seeing it for myself.

            I was cashflow negative to start with ( but originally the house was mine not an investment). Now I'm cashflow positive but making a tax loss (via depreciation).

            So I'd say keep it.

            Watch out for the tax-man ..... I managed to get decleared Non-Resident for tax purposes before I left ..... It's worthwile if you can get this sorted before leaving NZ (that is of course if it applies to you).

            Advantages

            You can arrange trips back to NZ around the business of your property investment ...... making the trips tax deductible.

            Tax losses are perpetual so it's possible to build up a sizeable tax credit to give you a " tax free" income for a while after you return.

            Disadvantages ???

            I can't really think of any that have applied to me ( i guess I'm walking down the sunny side of the street).

            good luck

            cheers
            Spaceman

            Comment


            • #7
              I agree strongly with the view to keep and rent out if at all possible.
              I would also get advice from an accountant specialising in property investments on the correct structure to maximise tax benefits. Any loss you may incur over the 3 years you will be away because of poor yield is likely to be less than the costs to sell now.

              Comment


              • #8
                Everything depends on you, your level of debt, your likely achievable rent, your expected outgoings, your likely income level overseas, likely movements in foreign exchange and so on.

                If you don't want tenant or maintenance problems but want to stay in the NZ property market you could sell and buy bare land, paying cash with your equity, or you could buy a more suitable rental property.

                Julian
                Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

                Comment


                • #9
                  My advice would be to keep it. Depending on where you're posted, you could see some good gains on the transfer to NZ$ as well, especially with the NZ$ forecast to drop any time now. That could help you cover any loss if any until it started making a profit. Also, if you rented it out, you can claim back your airfare to NZ - (free travel.... )

                  It would be quite simple to maintain the property if you found a decent PM.
                  handmade art for kids rooms

                  Comment


                  • #10
                    I would also get advice from an accountant specialising in property investments on the correct structure to maximise tax benefits
                    immediate tax-benefits are minimal for non-residents, as no wage/salary is earned to subtract tax from. If you left the property in your own name, losses carry forward each year, and gains are taxable at 19.5% (if your rental income is under $38,000). Trust wuldn't offer any tax benefits over own name.

                    You could set up an LAQC and have a NZ resident shareholder (brother, sister, mother, father) with 100% shareholding. You'd be the director. That way you could recycle your losses each year from the shareholder's PAYE tax refund, and pump it back into the property, if you so desired.
                    handmade art for kids rooms

                    Comment


                    • #11
                      If New Zealand house prices are set to stabilise or drop slightly and the NZ currency is set to drop against the currency you are moving to, you could be well advised to sell up in New Zealand, take your funds to that country, and when you return you can buy a better property ...that's if everything goes according to the master plan.

                      The truth is that there are many variables. Most respondents suggest keeping it, but sometimes it is better to swim against the tide of public opinion. Mind you, sometimes all you get is sore arms when you do. The important thing is to apply your consideration to all the variables before you make your decision.

                      Julian
                      Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

                      Comment


                      • #12
                        I agree with Julian on this one.
                        The decision is up to you but carefully way up all the options. If you can use the money to invest in something better ( eg PPOR) or simply dont want the hassle of a property here sell otherwise hold long term if you can afford it.

                        Comment


                        • #13
                          You used the wording "posted", is this a military posting?

                          I have friends who are in the military and are presently on a three year posting. They wondered about the same thing when they were "posted" and decided in the end to keep the house and rent it out.

                          The result - in the period that they have been away, the house has doubled (plus some!) and they have had the rental income.

                          Yes, there is the worry of how the house will be treated while they are away but if you're making rental income during that period, one should have put aside some money for maintenance and this can be used before you move back into the property.

                          Yes, you cannot expect tenants to look after your property the way that you do with regards to the grounds, but really, at the end of the rental period hire a skip bin/bob cat/school kids whatever to clean the place up. With a section size of 1000m2 there is also the opportunity to subdivide at a later date.

                          There are as many pros and as many cons on this site. Your decision. Make one that you can live with - not regret.
                          Patience is a virtue.

                          Comment


                          • #14
                            I've had some great advice. Thank you everyone who's provided advice.

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