It’s a question contemplated by many Australians who want to experience the New Australian Dream; sell your property or keep your house and lease it to tenants to fund your travels?
The answer is very complicated and every individual has different circumstances to consider. There are multiple factors that will influence your decision to sell your property and they should all be considered carefully. The very first thing you should ask yourself is how you may feel about someone else living in your home? If you can overcome the emotional aspect of keeping your home and leasing it to tenants; there are 7 very important questions you need to evaluate to find your answer.
1. Do the numbers measure up?
For many homeowners, the Australian property market has been strong and they could potentially pocket a large sum of money. However, transaction costs need to be taken into account. Will the real estate agent fees and early release bank charges for the mortgage be worth it? Is the net profit worth letting go of an appreciating asset?
2. Can you afford to leave the property market?
The property market is a fickle beast and depending on your property’s location, you may be unable to afford buy back in the same area. On the other hand, if you don’t intend to return to the same town or city, it may be advantageous to release the equity and be free of debt.
3. Can you afford to hold onto your property?
Travelling full time requires some cash to get started and to keep going. There are many avenues to fund your travels; you could budget and save the cash needed to obtain your set up, you could apply for a mortgage to release equity in your property or you could to sell your home to achieve the funding required. Then you’ll need to ask yourself again “do the numbers stack up?”
4. Are you ready to be a landlord?
2.1 million Australians own an investment property and while that may seem like a lot, it represents only 8.4% of the population. (Source: Australian Tax Office)
If you have never owned an investment property, you are probably feeling a little daunted by the idea. The reality is that being a good landlord isn’t difficult. You can manage a property yourself or engage a leasing agent. “What makes a good landlord?” Is a great article from realestate.com.au if you’re considering becoming a landlord for the first time.
5. Is your current home suitable as an investment?
A successful investment property can make a massive difference to your cash flow and your stress levels! Do the sums on your property’s net rental yield. While your current place may be ideal as an owner occupied home, it may not tick all the boxes for potential tenants. Research what type of properties are attracting quality tenants in your area. As a general rule, people who are looking to rent favour quality properties with access to public transport links.
6. What is your risk profile?
We’ve all heard the term YOLO and you already know time is more precious than money. You are planning to travel because these terms speak to you loud and clear. What is your financial risk profile? Will you sleep well knowing you do or do not have a asset somewhere waiting for you?
7. How long do you plan to be on the road?
Not everyone is suited to a life on the road. There are families, couples and grey nomads who abandon their dream earlier than expected because of various reasons. The kids might crack it, or you could crack! You may pull the pin yourself because the experience is not what you expected. “The secret to living in a caravan and surviving van life – 5 tips for full time travel” is a must read before you leave and during your travels.
Full time travel will alter the course of your life, for better or for worse, for richer or for poorer. Regardless of what you decide to do with your home, you will learn that experiences are more important than material things and your time with loved ones is far more valuable than any of your possessions. And once you’ve experienced full time travel, you may never want to go back!
See you on the road!
X Mia
