Sell or Rent??

Mr cynical; I havent found any 7ft tall midgets either....


I'm looking for a bit of advice. I just started out with my first property last year. I have a property that I purchased last April for 2.2M and I am now recieving offers of 2.65M.


I recieve a very generous housing allowance, and so I only have another 2.5 years untill the mortgage is paid off, that's if I stay in it and not rent it out. If I rent, I should be able to pay the mortgage off in 8 years.


Ideally I would like to keep the property and rent it out in a years time, using rental income to finish off the mortgage, and still be in a position to purchase another property, although money would be a bit tight for a while. My other option is to sell now at a gain of 28% and be all cashed up to buy back in, with no financial worries, and purchase a rental at a later date.


I am here for at least another 9-10 years and so if the market takes a dive, one would hope it would recover in that time period. So what advice do you have? Should I keep my rental and buy again next year, or should one become more liquid, reduce debt, buy back in and get a rental at another date?


As for Ronnie Chans (re hk property market correction) comments on the mass market only just recovering to pre bubble prices 11 years ago, well I havent been here long enough, but I dont agree from seeing how property has been performing out here in Tung Chung where I live.


Anyway any advice would be great, I'm currently on the fence on which way I should go.... Either way, I need to get a bigger apartment for my wifes ever growing wardrobe....

cheers

Since you'll be needing a bigger apartment, you can start looking for flats to buy that are priced cheap (esp., from panic sellers). That way, you can sell your flat with a profit and move in to your new flat.

We also live near ICC (new mega tower) and think that property prices here have big potential to go up in a few years from now. Domino effect all the way to Tung Chung. :)

Thanks for the replies.


I want a rental as an investment, but I just cant decide if I should sell now while I can get a good price or just hold onto it. The property is actually ideal for a rental(9-10K/month), and if I wish to buy back in later it will probably cost more.


I have spoken to alot of people; the banks paint a rosey picture about the market and just want to loan me more money. Real estate agents also try their best to paint a rosey picture. Others have told me that it would be good to sell and have 1m in the hand and be ready to buy back in when prices are lower... My guess is to sell now if I'm going to sell, and buy next year when I buy again. To sell or not to sell.........


As for Tung Chung, it will be interesting to see how prices are affected when the bridge to the mainland is built.


I guess I have a bit to learn about buying, selling and shifting money around to make the most of my cash..... I guess I'm in a lucky position, that the bank will lend me cash to buy another apartment, without having to sell my first property....

The more I think about it, I think it's better just to hang onto the original property and buy something bigger next year when prices are hopefully lower.


I'm always open advice though, Cheers K.M.

Was the purchase done April 2007 or April 2008? if it was April 2008 and you receive an offer +20% for a Tung Chung property, I will most likely sell it. If purchase was done last April 2007, the offer of +20% is rather low compared to average growth and the downside risk will be lower than the cost of entering the market again later.

purchase was last april (07') and offers are around 22% above what I paid, but I note that lower priced apartments out here have a lower growth than that of the larger apartments. I think that %22-25% is inline with other apartments out in Tung Chung of similar size.... I agree, I would like to see a larger offer percentage wise, but doesnt everyone....


elysium; your reply further leads me towards not selling, but I'm always open to offers if someone wants to offer me a large sum of money.....

list your unit with the agent at say 2.85M ~7% higher than transacted price, and set your limit at say 2.8M. be ready to open up your unit for visits. if a real offer comes along, then you have no regret. you will see that a number of owners are listing their property to test the market even if they are not so keen to sell. meanwhile, if you are looking to buy, look for motivated sellers...leaving HK, need cash for settling maturing debt, etc.

Keep the property, rent it! Rent temp for 6-8 months buy back in and hold two units that were fairly close to a bottom.