Sell or Rent?

TedLasso

TedLasso

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So a question, been asked to move to another country in Asia for a few years. Next stop after that will be Europe if my career trajectory takes goes as planned.

I live in an area near Sandton. 4 bedroom standalone house, pool ,garden etc

I don't know what to do about my house. Sell it or rent it out for a year or two then sell.

Reasons for sell:-
+Done and dusted. No worries
- will take loss on house (350k) and everything we put in it. Market is still recovering

Reasons for rent
+ if Asia doesn't work out , somewhere to come back to. 6 month lease.
+- area is going thru change. Seeing property being sold, and coverted to duplexes. Each duplex being sold for 2m - which is ridiculous ,so my land is worth more than the house considering if I sell, I could get 3.2m
+Thinking in the future if we don't come back, I would do the same and have a nice retirement nest egg. And also keep one duplex to come back to. Family is still around.
- renter could completely f up the place. Squat etc. Would make life difficult
- forcing me to keep roots in South Africa and not move forward.


My wife says we should just sell and be done. I have never really done well with investments but I know the area we bought into. We have seen the change happening and it was the reason we originally bought 10 years ago knowing this was a possibility that high density housing would be required. In fact , COJ has our area marked for high density housing so changes are easily approved.

Stupid maths but I sell for 3.3m if lucky. Or redevelop (haven't done the costs ) but putting 4 units on land , and each at 2.5, makes a nice return after development costs. Maybe the stress will be the end of me.

How should I be approaching this? Cheers
 
TedLasso said:
My wife says we should just sell and be done.
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Yep, personally that's what I'd do.
TedLasso said:
Stupid maths but I sell for 3.3m if lucky. Or redevelop (haven't done the costs ) but putting 4 units on land , and each at 2.5, makes a nice return after development costs. Maybe the stress will be the end of me.
Click to expand...
This doesn't sound feasible unless you have funds and connections to make it happen. Ever built from scratch?
TedLasso said:
How should I be approaching this? Cheers
Click to expand...
Tough decision. Lots to weigh up. How sure are you the property would be bought by developers (spoken to any?). Yes, many risks to renting it out, especially if abroad. If going this route, you'd need to deduct the letting fee (±10% or 1 months rent), management fee (±8%), lease renewal fee, maintenance coordination fees, actual maintenance, delinquent renter insurance etc etc. If you can factor all of this, still charge rent above your bond payments - then maybe yes. If no, then sell, invest the cash properly and enjoy your life.
 
I’d recommend renting it out until you’ve made a firm decision. If the house is fully paid off, that’s a major advantage and should factor into your decision.

Developing the property might seem like a great long-term play, but the process is full of red tape and could take a long time to go through. It’s not something I’d pursue unless you’re fully committed to staying involved.

Selling isn’t a bad option either, but it could take a while to find the right buyer. Plus, once you sell, you’ll need to move the funds overseas, and in most European markets, that money won’t stretch very far.

Renting has its risks, but if you hire a solid property management company (typically around 10% commission), they’ll handle the headaches for you.

I personally kept my properties in SA when I moved, and I’m actually adding more because they generate strong rental income. If things don’t work out overseas, you’ll still have a paid off home to return to, one that’s covering its own costs while you’re away.
 
Only keep it if you are seriously planning on moving back at some stage, then maybe and only if you would move back to that very same area. Even then I wouldn't recommend it. But anything else not a chance, sell now before JHB goes straight down the shtter, it’s only a few flushes away as it is.
 
TedLasso said:
So a question, been asked to move to another country in Asia for a few years. Next stop after that will be Europe if my career trajectory takes goes as planned.

I live in an area near Sandton. 4 bedroom standalone house, pool ,garden etc

I don't know what to do about my house. Sell it or rent it out for a year or two then sell.

Reasons for sell:-
+Done and dusted. No worries
- will take loss on house (350k) and everything we put in it. Market is still recovering

Reasons for rent
+ if Asia doesn't work out , somewhere to come back to. 6 month lease.
+- area is going thru change. Seeing property being sold, and coverted to duplexes. Each duplex being sold for 2m - which is ridiculous ,so my land is worth more than the house considering if I sell, I could get 3.2m
+Thinking in the future if we don't come back, I would do the same and have a nice retirement nest egg. And also keep one duplex to come back to. Family is still around.
- renter could completely f up the place. Squat etc. Would make life difficult
- forcing me to keep roots in South Africa and not move forward.


My wife says we should just sell and be done. I have never really done well with investments but I know the area we bought into. We have seen the change happening and it was the reason we originally bought 10 years ago knowing this was a possibility that high density housing would be required. In fact , COJ has our area marked for high density housing so changes are easily approved.

Stupid maths but I sell for 3.3m if lucky. Or redevelop (haven't done the costs ) but putting 4 units on land , and each at 2.5, makes a nice return after development costs. Maybe the stress will be the end of me.

How should I be approaching this? Cheers
Click to expand...
Sell. Market isnt recovering. Millionaires are dumping that side for the Cape. So unless you have an apartment in the Cape, I would probs just sell it and invest in somewhere. You can choose the risk but Coronation Top 20 fund isnt bad, and it can be moved same day if there are issues.

How about you tell us where in Asia you plan to go. That may seal the deal then. If its Singapore, Indonesia, Japan, Taiwan, South Korea then I wont bother returning (although I am borderline with Korea. Otherwise Hong Kong is soso and Macau yes I wont bother returning ever.

SA currency value will probably drop further with this Trump fiasco.
 
I would not keep and rent a property out if I'm not close by to have a hand on it and check it out often. Not only do you need to keep an eye on it but you also need to keep an eye on the estate agent renting it out. Big stress and you not near to sort it out.

Also you never going to develop the land, way to much work stress and paperwork, so you not going to see the profits. The guy that buy it from you and develops it will see the profits.
 
I guess it would ultimately be determined by who is close at hand to manage it on my behalf when I’m not around.

If there isn’t someone like that around and it would purely be a rental agent then I don’t know.

Losing 350k instantly on a sale if you can afford to keep it seems a bit silly to me.
 
Ultimately your choice, but as some have already said .... and me from experience .... sell it .... It will come back to haunt you.

Unless you are going to NZ, apparently those folks come back? (Prolly didnt know the diffs between Emigrate and Immigrate)
 
Well firstly congrats on your new career path and it's trajectory.

I would rent the house for atleast one year and begin with the planning and getting the approvals in place where you could build your 4-12 units then you would have 2 options:

A. Sell the property to a developer
B. Leverage on the property get a bank loan (with milestone payouts) to develop the units with a builder
C. On-board a VC to fund the dev. with a profit sharing agreement
 
Congrats on the opportunity, Having done this just over 6 years ago you have a few considerations. I've had a few people I know move, and we all took slightly different routes, so there is no straight answer. What I can tell, those that are the happiest got the timing right (this is more luck than planning)

1) How long term is the role in Asia? What is your standing in the company, do you feel secure/high potential?
2) Where in Asia - its a big place, what are you comfortable with culturally? Have you even visited the country/city you are going to? Have you spoken to people that live there about how it is?
3) If you went for 2 years, and made decent intl money, would you come back to the same house?

There are few financial considerations to apply too (these have been mentioned already), i.e. is the house paid/bonded. Consider how long it will take to find a seller/tenant if you left it empty.
 
theratman said:
Selling isn’t a bad option either, but it could take a while to find the right buyer. Plus, once you sell, you’ll need to move the funds overseas, and in most European markets, that money won’t stretch very far.
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The sooner he moves it over the more he'll get for it though, as the Rand will most likely never recover permanently.
 
A friend of mine did that 6 years ago, kept his house out in Sandton, up until about 3 years ago where he sold it. Realised he wasn't coming back, so you could try rent it out until you see how the wind blows.
 
you say you "could" get 3.2-3.3 for your house.. does this take into consideration the estate agent fees if using them? it can take years to sell your house.

Do you have a definite job lined up overseas? if yes then go

1) sell the house, you've lost money but at least it's done. The loss could be up to R500k depending, let's say worse case.
2) I don't know if your house is paid off and you will see cash, or not paid off and you see nothing.
3) if you see cash, just convert it all to USD, just that alone gets you 6%pa growth in the devaluation of the ZAR
4) renting is a pain unless your property is 100% perfect and your agent managing it is 100% on the ball!
5) you will pay a fortune in monthly agent fees, rates & taxes, maintenance etc etc etc. Your ROI is minimal
6) one doesn't make much money from property in SA unless you're a developer
7) selling your property forces you to work hard overseas and be committed to making it work!

8) oh and then there is SARS... you still need to pay that even though you work overseas, unless you financially emigrate
 
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