Should I sell my home and buy a new one or should I keep it and borrow against it to buy another?

Question

I now proudly own my home in the inner city of Melbourne Australia and have no mortage. The house is in poor condition and needs to be rebuilt. My son's father died leaving his benefit payout to me and my son so I have extra finance. Should I sell my house, put all my capital together and buy a new, more expensive dwelling or should I keep my home, rent it out and borrow against it to purchase another dwelling. Alternatively I could build a new home on the land but don't feel up to such a huge project. In short, is realestate the best investment?

Answer 1

If you do not have a mortgage, enjoy you life ! The real estate is no longer the best investment. Squash your brain and innovate a product to sell it on the market. Invest in it.

Answer 2

Real Estate is a brilliant investment in the current market. The current lull in prices means that you are buying at a time when you can do better research. The property market will pick up later this year, giving you equity in the new place.

How much renovations are required on your current home? If a sipmple touch of paint and a tidy is all it needs then keep it and get a professional real estate company to manage it for you. Their costs are tax deductible and you don't have to worry about doing maintenance yourself.

The first thing you should be doing is asking:

Where do i want to live?

How big a place do I need/want?

What lifestyle do i want?

Once you have answered these questions you'll better know the answer to the one you've asked here.

Good luck and feel free to call me for a chat. 07 3878 3666

Answer 3

Real Estate is a great long term investment....inner city is great for renters...if you rent out the property and buy something else you will not be a tax effective as doing it the other way around. You have equity which most people dont...there are 2 ways to go here - business or personal. See a financial planner or accountant ... get recommendations as many get referral fees for the mortgage they pass on to you.

Answer 4

It all depends if you are happy living in the area and if you are quite happy to live there as the house is older.

Get a valuation on your home is a good start

If I was in your shoes and the house is still livable I would purchase another one as there's a lot of properties under mortgagee sale so you can get a bargain, which has the potential to have a positive income.

But please do your own research before purchasing

It doesn't have to be new, but a brick home is better than weatherboard, rent it out to pay for itself.

Make sure the purchase price is able to pay for itself.

A new home is great but you are sitting on a lot of capital.

If you're lucky you could probably purchase a house with a granny flat even and rent that out for extra income.

Answer 5

We borrowed against our paid up house and bought another larger one and rented the first one out for a few years.  That worked out pretty well, but being a landlord is not a piece of cake - especially with a house not in good shape.  I've had to go over at awkward times to do something as simple as change a fuse.

Real estate is a good investment, but we have diversified and it might be good for you to do so too.  If the location suits you and your house isn't actually falling down, why not use some of the money for renovations, and invest the rest in stocks?  Consider all your options.

Answer 6

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Answer 7

You are in a good place financially. I would sell my home & with the money buy another that way I still wouldn't be in debt. Remember you will have to pay Stamp Duty on your next home purchase so factor that in to the purchase price.

Answer 8

Buy the new one.  Why would you want a house you have to rebuild?  Also, how can you rent it out in that condition?