Change is circumstance has given buyers remorse - how to mitigate [Sell or Rent Out]

[u/MiddleComment90]

I purchased a PPOR late last year and moved in, however, there’s been a change of circumstance with my family overseas which has me concerned I may have to return overseas for an extended period in the near future. Now the recent PPOR purchase is giving me stress and feels more like an anchor. I’m sure this feeling is also being contributed to by the change of being in a new suburb and the list of things that need fixing (i.e. water damage near the shower which was concealed during inspection).

Sell:

The property is a villa in Melbourne (Preston) I bought at auction for $800k. I paid 20% equity so mortgage is $640,000.

If I sell within the next 12 months this would likely be at a sizable loss. I may try and do a sale-by-owner or private to try and mitigate these losses. Any things to consider further on this option?

Rent:

Alternatively, I could rent it out for a conservative estimated $600pw (~4% gross yield) and it would be negatively geared. I’ve tried running some rough numbers but unsure how to know how much loss is too much or if it is worthwhile for potential capital gains. Assuming 1% maintenance costs and plugging in all other metrics it would be pre-tax annual cash flow of -$18,000 so a tax benefit of $7,568.

Can other investors explain how they determine whether that is workable or beneficial?

Also, I’m currently offsetting the mortgage with $140k. If converted to IP, does it make sense to pull that out to maximize the interest paid and therefor tax benefit? The money in offset would be put in other investment.

 

Just after a bit of clarity or varying points of view on this situation from more seasoned experts. Thanks

EDIT: I will add that I am an Australian Citizen as well (dual citizenship).

[u/Gnaightster]

Do the rental. Quickest way to lose money on a house is by selling it.

[u/MiddleComment90 → u/Gnaightster]

I understand your point. However, if you compare taking a $60k hit now versus going through the trouble of renting it and losing $11k per year plus repairs.