Rent vs Sell

[conradl]

Didn't want to hog the previous discussion regarding buying a house so decided to create a new one. I have just bought a new house (our current home has become too small for us). The current home is paid off and we have to decide to sell it or rent it out. I got a relatively high interest rate ie 9.34% from the bank for the new home, so my questions are, am I better off selling the current place we're living in (I don't really see exceptional growth in the next few years wrt the housing market) and taking the money and putting it into the bond, thus reducing the interest per month? OR Sell the place and take the money, put 50% in the new bond and investing the other 50%? Or rent out the place?

[DEP]

It would depend on a few factors: location of current house / Size of new bond / your financial position / other investments / age etc.

[BC02]

like DEP sais, it depends on a few factors but a good starting point is working out what the interest will be if you paid your house off and renting out the other place. Is your base cost still good if you added another 300k+ to the cost price?

A very important question is also if you pay off the house what will you invest in then?
Which shares, mutual funds, ETFs?

Just know whoever is going to rent that place is going to bugger up your old memories of your house completely.

[prancing_horse]

If you have bought cheap, you will sell cheap. I would definetly sell and put the lot in reducing your current bond because 1) the current interest rates a not going to be this low for ever, so make a dent in your bond while you can and 2)I feel the stock market is a little expensive at present. That's my 5 cents worth

[DEP]

P.Horse - good point. That's worth more than 5 cents...

[Goldbull]

Never rent buy small in a good position. Here where I live a 3-bedroom house in 2002 cost R 1.2 mill today 2012 same house costs R 5 mill

[knopkop]

Re reply given by BCO2 Your last sentence absolutely spot on. Says it all. All one could add to that is "And remember that because of 'that'you may have some difficulty to sell the dam place while the tenants are there. Certainly do not compare that selling price against potential of when you are there and still mowing the lawn!!!!

[Penny_Pincher]

You can also off course also consider investments alternative to equity. Silver bullion is a good example. It's dirt cheap at this point in time. There has been a lot written on that lately. But off course it's all about risk and return. Do you have the appetite for risk...only you can answer those questions.

[conradl]

thanks for the replies. Here are some of the questions answered related to DEP's reply. Area: Northern Johannesburg, its a small place worth 600k Age: 30 Size of new loan: 1.3mil Other investments: Significant long term investment portfolio Other debt: None. Appreciate the input guys.

[DEP]

Sell while you in the property... invest 50 % and pay 50% in Bond is a nice option. Go for it - you doing good at your age. Like the thinking...

[fusion12321]

threshold would have told u - at 30 i was retired and owned a car of R1.3m , thats why i ( treshold ) is a c8nt with a 2inch [email protected]

[THRESHOLD]

Sounds like a "commodity" type of property (a good thing.) It costs so much to sell (including possible tax, agents' commission, bond early-settlement fees, legal fees municipal advance payments, time-value for the sale tranaction to be finalised _ holding costs during that time) that it may not be worth your while to sell it.

[THRESHOLD]

fuzzy123 - relax - you too will retire one day - I promise. A nice damp plot somewhere with not a care in the world. It's waiting for all of us, even the most profane.

[DEP]

Threshold - you would do well as a politician!

[DEP]

...and another point - I bet you didn't have your first home paid by the age of 30 and have a few investment (like conradl).

[THRESHOLD]

No DEP - sometimes - when you own the thing - it just isn't wort selling. I am still not in favour of buying property - but sometimes it just isn't worth selling. I did buy a little cluster recently in Strathavon a killer price. So - if the price is right - I will still dabble. BUT that is not to say that it was the right move. I will probably regret it. It's just an old habit. As I said before - property was very good to me and every once in a while - I can't resist.

[DEP]

Thre... if property was good to you "Stop cursing the hand that feeds you"!!!

[THRESHOLD]

DEP - this is not a venue for comparing positions. At 30 I could have retired comforatably already - no debt and plenty of investments. Each of us is on this forum for our own reasons. If one expresses an opinion, one sets oneslf up as a target. Sometimes I dangle a topic just to get a readtion eg. when I said I was buying GFI. Otherwise things can get very quiet around here. Anyway - there is more than one way to build wealth. Presumably we are all after the same thing. Other than fuzzy that is, who seems to hang around the fringes waiting vent every once in a while; but has now real opinion or contribution to offer.

[THRESHOLD]

comfortably and others - oops

[THRESHOLD]

Property was more than good to me. But, like all things, it had it's time. Construction stocks were good to me. Don't want them any mre though.