As some of you will remember, my wife and I are building a new house. The process is quite a long and drawn out one, but one of the decisions that my wife and I have had to make was what we wanted to do with our existing house.
I’m not going to lie, the decision making process has gone backwards and forwards a few times on how we should handle things. The main options we have been mulling over have been:
- Keep our current house and when our new house is finished, rent out our existing house.
- Keep our current house until our new house is built then sell it once we move to the new place.
- Sell our current place now, rent somewhere else and then move to the new house when it’s finished.
After doing some of the sums we landed on options 2 as being the easiest option for us in terms of not needing to move house twice, but noted that it carried some extra risk over the 3rd option as once the new house is finished being built, we will have the most amount of debt against our names and so we will be highly motivated to sell the house ASAP.
That decision was made about 3 months ago and up until about a 2 weeks ago it was still the right decision. Things have changed a little bit since then and both my wife and I were starting to get cold feet on the idea of carrying so much debt. The main considerations we had were:
- It’s a massive amount of debt for a single income family.
- If even one thing goes wrong over the next 6-8 months while the new house is being built we could be in some real financial strife.
- My job is potentially significantly less secure than it has been over the last few years (should know more in November on that front).
- If property prices start going down we would be in a pretty average spot trying to sell in a depressed market. Lately the stock market is in free fall, and that is often a good lead indicator of how the other markets will act in the coming months.
- If we can’t sell once the new house is built, we will be at the buyers mercy as to the price they want to give us. We just wouldn’t be able to service the debt very easily without a renter in the other house, or selling.
- I was already starting to stress about the debt we would be carrying.
- I see no reason for property prices to go up in the next 12 months, but plenty of reasons for it to go down over the same period. So we may as well get out now while we can still get a price we are happy with.
In the end we decided on selling the house nowish, and then renting elsewhere while our house was built.
I was talking to a friend at work about it all the other day and she mentioned that we might be able to have a 4th option that we had previously never considered.
- Sell out current place now, rent the same place off the new owners and then move to our new house when it’s finished.
Apparently she has had a few friends do this and it has worked out well for all parties involved.
- We don’t have to move twice.
- The new owners of the property have guaranteed rent for the next 6-8 months.
- The new owners can see that we are likely to keep the house in good order based on how it is today.
- We would be willing to pay a slightly higher rental amount to minimise the inconvenience of having to move twice (we won’t tell them about this though unless we have to).
The main drawback would be if we don;t get any investors interested in the place and can only get people wanting to move in. If that eventuates then we would have to fall back to our original plan of renting and moving twice. Not a huge deal, but still a little annoying.
So now my wife and I are madly trying to clean the house and make it ready for sale. The biggest hurdle is that we want to have it on the market in November, so that we can sell it prior to the low season being December/Christmas time.