There is a junction reached in every home owners life when they need to move on, it could be for a leafier suburb or just more space to stretch out. When your home is where your child took their first steps, letting go is not easy. So should you hold on to it?
Reasons why you should sell the old one
Firstly, a big disclosure: I’m pragmatic about these things. Of course, I am going to preface this with, check with a good financial adviser if holding on to your old home is actually a viable option (we are good financial advisers). I am not about to quantify emotional ties to a place, however, there is one aspect to explore.
Does it make a good rental
Imagine, for a second, that you did not own the current home, but actually lived in the home you wanted—the one in the leafier suburb with tons of space. Would you be looking for a rental investment? If so, what kind of property would that be, and how much would you likely spend? How much rent would you expect? If the answer leads you to buying your old home, then holding on is the way to go. At times, we do meet clients who end up leaving a trail of past homes as rental investments. Over the long term, this can be a good strategy. However, the opportunity cost must be considered, as the alternative option could be to sell the current home, buy the dream home, and a more suitable rental. Often, ‘more suitable’ could mean cheaper, or with a better rental return.
Gambling can lead to pain
Speculation can lead to tears. If the idea is to hold on for a better market to sell, and carry more debt than you are comfortable with, be aware. It can, at times, take many years for the market to pick up. I remember owning a place in Hamilton, where the market entered a lull for seven years.
You want your family to enjoy the house
Selling, at times, can mean that you are comfortable spending a bit more on the family home. At other times, the priority might not include owning an investment.
