Should I sell or invest in my second property?

As your circumstances change and you decide to upgrade, downsize, or move locations, the decision to sell your home or keep it as an investment may be something that you need to consider. 

There is no one size fits all approach in choosing to sell or keep your property for investment and it is best to talk with financial or relevant advisors to make the best decision for you and your family.

Selling

Some of your reasons for selling will be determined by your current financial situation including equity in your current property. 

When assessing a mortgage for a new property purchase, financial lenders will account for equity in your property and determine if there is value in the home to borrow against with making the new purchase.

Equity alone will not be the only element that is considered in purchasing a second home and financial institutions will also look at current savings, employment, and debt, especially if you are purchasing a larger, more expensive property.

Should you decide and can keep both properties, you will need to factor in the responsibility of two mortgages that you will hold over the properties and repayments on both. 

It is also beneficial to consider lifestyle choices and the added responsibility that comes with owning a second property and investment when making the decision to either sell or invest.

Investing

The most beneficial factor for keeping the property and using it as an investment is the potential for long-term gains as the property appreciates over the years. 

While there are costs for maintenance that need to be accounted for and as markets fluctuate, there are advantages to the longer-term equity that can be provided with keeping the property and creating an investment portfolio.

It is important to calculate the potential rental returns on the property to determine the feasibility of maintaining it as an investment. 

If you choose to rent one property, rental payments and expenses may not cover the mortgage repayments in whole and there may be a requirement to top up those payments to meet commitments each month.

Keep in mind, that as a property investor, you are responsible for repairs and maintenance on the rental property and rental markets can fluctuate. If interest rates rise, there is no guarantee that rents will also rise to cover those increases.