Sell or Rent? How to Run the Numbers on Your Home
If you've just bought somewhere new and you're not quite ready to let go of the old place, you're not alone. The idea of renting it out rather than selling is worth taking seriously. This article is designed to help you work through the numbers honestly - not to push you toward renting, and not toward selling. Just to give you a clearer picture so you can make a decision you feel confident about.
The numbers at a glance
A Christchurch rental at $650/week grosses around $33,800 a year - but after rates, insurance, maintenance, and vacancy, most landlords net closer to $395/week. Still a steady return that, for many, makes holding onto the property well worth it.
You've bought somewhere new. The old house is sitting there, and someone - your partner, your mortgage broker, your mate at the barbecue - has floated the idea of renting it out instead of selling.
It sounds appealing. Passive income, an asset you're already attached to, a safety net against a market that feels uncertain. But is it actually the right call for you financially? And if it is, what does the real return look like once you account for everything?
First, the sale side of the equation
If you sell, you receive a lump sum. For most people, that money either reduces debt on the new home, goes into an investment, or does a bit of both. The question isn't just "how much will I get for it?" It's "what will that money do for me?"
If selling your home and paying down your new mortgage saves you $1,800 a month in interest, that's your benchmark. Whatever you calculate from renting needs to meaningfully beat that - or at the very least, come close enough to justify the added complexity.
Other things to factor on the sell side: agent commissions, legal fees, and any costs to present the property for sale. These eat into your net proceeds.
Now, the rental return - what it actually looks like
This is where a lot of people get tripped up. They look at the weekly rent figure and do a rough calculation in their head. The reality is a bit more layered.
Start with gross rental income
Let's say your property rents for $650 per week. Over a year, that's $33,800 - but only if it's tenanted 52 weeks of the year. Vacancy happens. Between tenancies, you might have two to four weeks of no income while the property is cleaned, advertised, and a new tenant moves in. A conservative assumption is 50 weeks of income, not 52.
Adjusted gross: roughly $32,500.
Deduct your costs
This is where the numbers get a bit more real. Here's what most landlords need to account for:
Property management fees - typically 7–9% of weekly rent (Birds Nest charges 7.95%, all-inclusive). On $650/week, that's around $2,700 per year.
Insurance - landlord insurance is different from home and contents. Budget somewhere in the range of $1,500–$2,500 annually depending on your property and insurer.
Rates - you'll still be liable for council rates. In Christchurch, that could be $2,500–$4,000+ depending on the property.
Maintenance and repairs - a commonly used rule of thumb is 1% of the property value per year. On a $700,000 home, that's $7,000. It won't be that every year - but when the hot water cylinder dies or the deck needs attention, the costs add up fast.
Healthy Homes compliance - if your home doesn't already meet the Healthy Homes Standards (heating, insulation, ventilation, draught stopping, moisture control), you'll need to factor in upgrade costs before or shortly after tenanting.
Accountant fees - rental income needs to be declared, and most landlords use an accountant, typically $500–$1,500/year.
|
|
Cost |
|---|---|
| Gross rental income (50 weeks) | $32,500 |
| Property management | -$2,700 |
| Insurance | -$2,000 |
| Rates | -$3,000 |
| Maintenance reserve | -$3,500 |
| Accountant | -$800 |
| Net rental income | ~$20,500 |
That's around $395 per week net - which sounds very different from the $650 headline figure. This doesn't mean renting is the wrong call. It means $395/week (roughly $20,500/year) is the number you should be comparing against what selling would do for you.
The tax piece
Rental income in New Zealand is taxable. You add it to your personal income and pay tax at your marginal rate - which for most people in this situation is 33% or potentially 39% if income is high.
However, you can also deduct many of your costs (management fees, insurance, repairs, rates, and more) against your rental income, which reduces your taxable rental profit. It's worth talking to an accountant early, ideally before you decide, because the tax position can shift the numbers meaningfully in either direction.
Bright-line rules are also worth understanding. If you sell an investment property within the bright-line period, capital gains may be subject to tax. This has changed a few times in recent years, so get current advice specific to your situation.
The capital growth angle
One thing the income numbers alone don't capture is what the property might be worth in 10 or 20 years. If Christchurch property continues to appreciate, holding on to that asset could be worth significantly more than the rental income alone suggests.
This is a legitimate consideration - but it's also speculative. Markets go through cycles. The value of holding the asset long-term depends on your financial position, your risk tolerance, and what else you could do with the capital from a sale.
It's worth including in your thinking, just not as the only reason to hold.
You might be surprised how many people start this way
Becoming a property investor by accident is more common than you'd think. Birds Nest owners, Jen and Tim, both kept their first homes when they moved and rented them out, and that's how their property journeys started. It's actually one of the most common pathways into investment. Not a deliberate grand plan, just a sensible decision made at the right moment that turns out to have been a really good one.
Questions worth sitting with
Before you decide, a few things worth thinking through honestly:
Do you have the cashflow to cover periods of vacancy or an unexpected large repair without financial stress?
How will you feel if something goes wrong with the tenancy - damage, arrears, difficult situations?
Are you emotionally ready to treat your home as a business asset rather than your home?
Do you have (or plan to get) good advice around tax, compliance, and property management?
None of these are reasons to automatically say no. They're just the things that catch people off guard if they haven't thought them through beforehand.
The bottom line
Renting out your home rather than selling can be a genuinely good decision - but the real return is usually more modest than the headline rent figure suggests. Once you account for costs, vacancy, and tax, a $650/week rental might net you $395/week. Whether that stacks up against what selling would do depends entirely on your specific situation.
If you're working through this decision and want a clearer picture of what your property could realistically return as a rental in the current Christchurch market, a free rental appraisal is a good place to start. There's no obligation - just real numbers to help you decide.
