Hi All,
What would be the best course of action to take with an investment property being propped up by $600.00 per month? (Far to long a story to explain how this came about!).
We have a few ideas of our own, but would like to know what other investors would do.
[biggrin]
Cheers
LynnetteTo give you a sensible answer, we need a little more info.
How much is the property worth and is it in a high capital growth area.
Also how much is this cash flow drain putting a strain on you?
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.PropertyUpdate.com.auHi Michael
The property is 20ks from Brisbane CBD, and has enjoyed reasonable capital growth since we purchased it in 2001.
Yes it is a considerable drain on our income.
Any information or suggestions would be greatly appreciated.
Thanks
LynnetteLynette
Depending on the location and value why dont you look to wrap it and onsell by way of an installment contract or license to occupy.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Hi Lynette,
P and I or Interest Only Loan?
Depreciation report done?
Market rent or better being paid?
ITWV done?Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi there
If I couldn’t make it cash flow positive by some means then I’d sell it.
I nearly did that just recently but ended up doing some improvements and renegotiated the rent so now there’s money left over each month instead of me forking out each month. Plus I will recoup the reno outlay within 1 year.
My view is that anything that continuallly costs me money is not an investment.
Cheers
G’day Lynnette,
You haven’t detailed whether the $ 7.2K p.a. is after tax contribution from your pocket, or simply costs are bigger than rent by 7.2K. If the latter that’s before tax, and so will be 4 or 5K p.a.
Either way, take the after tax bit you need to chip in and divide it by the value of the place. That’ll give you some idea of what it needs to grow by for you to “break even”.
Say the place is worth 100K
7.2 / 100 —> needs to grow by 7.2% just to break even —> dump it and run a mile.
Say the place is worth 700K
7.2 / 700 —> needs to grow by only 1%, everything in excess of that is equity straight onto your ledger. —> Keep it, you’ll make heaps.
This game we play is simply a big numbers game I find.
Good luck whichever way you go.
Many thanks for all your comments – we’ve certainly now have a few more options to consider.
Regards
LynnetteI am no real estate guru but I would like to share my view on this.
Ideally we should invest for the cash first then for capital. However, It depends on the level of your negative cash flow. If you have little negative cash flow, say less than $50 per month but have around $600 capital gain per month then I don’t see why you should sell your property.
Just my opinion ïŠ
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