Hi everyone,
Does any one else out there agree that Kalgoorlie may have reached its peak at the moment??
My 3 bdr unit bought $136k Feb 05 now valued $230k.
Was %8 yield but with todays value only %5 yield.
I am in the habit of buy and hold, but I cant help feeling that their may not be growth in this area for some time now. Am looking at reducing my home mortgage to next to nothing as it annoys me paying that NON tax deductible interest to the bank!
thoughts?TD
I would hold on for 12 months. I think it may benefit from flow on effect. Regards Linda
I won’t be selling my propertys in the Golgfields in the near future.
[cigar]David
hi Tracy,
If it is the capital growth prompting you to sell I’d hold on. kal follows the resource sector and there is still plenty of activity there. if you are selling because the current value yield is lower now than when you bought perhaps a rent review is in order, rents in kal are growing because of a shortage of rental property. however if you simply want to get rid of your P.P.O.R. morgage that is a good reason in my book.[skull]You are also basing the current yield on what it’s currently worth. The yield on what you bought it for is still 8%.
Having said that, one of our properties has gone up in rent from $180 per week to $220 with the incoming new tenant. It did have an small increase up to $190 a few months ago.The agent suggested the latest rise not me.
By the way; we aren’t selling. I agree with Grim on that one.
If you can pay out the home loan it may be a good thing to take the profit and become debt free so to speak, then you can use the equity for more investing.Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
I was thinking about selling my house in Boulder till baout 1 hr ago. I was hoping to pay off my mortgage with the net proceeds of sale same as you. I spoke with the selling agent to give me a valuation of the property. She told me that at the moment she thinks my property will sell for about in the current market for $220k but in 12 mths time could possibly be worth $280k-$300k. Im definately not selling now.
Hi Tracy,
I think houses are still doing very well in Kalgoorlie. I would certainly hold on to the houses for the time being. Units on the other hand have peaked (I believe) and it may be a good time to sell units there.“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Originally posted by TracyD:I cant help feeling that their may not be growth in this area for some time now. Am looking at reducing my home mortgage to next to nothing as it annoys me paying that NON tax deductible interest to the bank!
There’s an old saying in investment circles – “You’ll never go broke taking a profit”. It’s true.
If you sell and clear $70,000, you’d get a guaranteed 7.5% pa compounding return on that money by paying down your mortgage. On the other hand, the property would only need to appreciate by around 2.5% pa to equal that rate of return (leverage, depending on LVR).
So you’ll need to weigh up the odds. What are the odds of the IP returning <2.5%, around 2.5%, >2.5% over the next few years? If you believe the odds of >2.5%pa are less than 50%, you’re saying it’s likely you’d lose money by holding onto the property.
Some may say that your property will average 7% pa over the long term. If so, a 70% increase over 2 years represents 8 years worth of expected appreciation, ie it’s already hit it’s 2013 price. I don’t know if that reflects reality, but it’s interesting, huh?
F. [cowboy2]
“If you sell and clear $70,000, you’d get a guaranteed 7.5% pa compounding return on that money by paying down your mortgage”
it’s not quite that high – it’s only the real interest rate i.e. the amount above the base rate, as the deflation of the other mortgage is a real benefit, not to mention the deflation of the PPOR mortgage. this is probably more important than the rental return IMO.
Hi all,
Thanks for the feedback!
I have decided to hold for another 12 months and increase the rent $10 per week with the current tenants.
This will make yield on purchase price %9.1 which is excellent.
I will re-evaluate in 12 months time and see what it is worth, if it does increase to what is expected, it will be well worth it.
cheers!TD
You must be logged in to reply to this topic. If you don't have an account, you can register here.
