Hold or sell in Christchurch?
Question from Kay updated on 21st October 2014:
We have owned two rental properties in Christchurch for 10 years and were fortunate to only suffer minor earthquake damage, which has now been repaired. With the market and recent valuations we are considering selling one of the properties. The properties are negatively geared and placed under a look through company and the mortgages on the houses are approximately half of the value. We are considering selling the house that is 25 years old. As there are so many new ones being built and I am worried the older house's value will decline. Do we sell or hold onto it and continue to pay the mortgage off slowly?
Our expert Kris Pedersen responded:
With the properties being negatively geared you probably need to start by figuring out how much they are costing you from an annual after tax position. Then compare this against how much you are going to lose in agents and overall sales costs. It potentially is worth talking to both a property manager and a valuer to assess what additional rent and value you could get by tidying the properties up. Also ask the valuer their impression on whether second hand property values may decline. I am not an expert in the Christchurch market but was under the impression that both values and rents were increasing overall. Thus it may be a case of you still getting price increases rather than a decline in the short to medium term because of the lack of supply which should continue for a while with the building stocks being so depleted.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz
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