Hi I live in Oz and have a property in Invercargill I want to sell it but was wondering on peoples thoughts it does need some work done to it. It is a weatherboard home and a few boards need replacing and window sills that would cost 4,000 just to do that then i would have to pay someone to paint it. The carport needs work done on it also the backyard is plain looking and terrible. The inside could do with a paint also and it needs a split system(heat pump) put in. I could knock a wall out in kitchen to open the place up a bit as the kitchen is tiny some carpets could be replaced and the property also has a dodgie looking hedge out the front that tennants havent looked after so i could replace this with a fence. I am just wondering if it would be worth doing as it would cost a bit of $$ to do up. I do have access to money that i could send over to pay others to fix up but i am wondering if its worth doing what are you thoughts? thank you
Without more info it is hard to suggest a plan.
How much did you pay, how much is it worth now, what is the rent return, what will be the projected rent return after the renos?
Also; why are you selling? is the property cashflow pos, or neg?
Tell us more, and we can suggest a few things.
i purchased it 3 years ago for $66,000……as is ….its worth $140,000 now…it is positive cashflow at $160 per week rent
well my plan is to sell no matter what as i owe a fair bit of $$$ on my ppor….but am wondering if the $$ i spend to fix up will make a great difference to the outcome the house is in south of Invercargill if that helps…which the better side of town is the north so i have been told……… any more questions please ask away
Why would you sell rather than refinance?
Whether to do the works or not is something you have to research: it may sound obvious, but figure out how much each item will cost, and how much value it is estimated to add to the property. (Ask a local real estate agent for advice.) If an improvement costs at least 50% more than it will cost, then it's worth doing.
So, in 3 years you have more than doubled your money, and it provides you with $160 per week of free money.
Why would you sell it?
Does the "better side of town" have as good a return as this?
Pu that extra $160 onto the PPoR.
Unless the house is a hazard, and the tenants are complaining every day, leave it as it is.
well the problem that i had a year ago and i still have it now….Tenants do not stay in the house for very long at all….. i think its maybe because the house is a very cold house that's what pm says…..when i brought the house 3 years ago 2 of the window sills where rotting and a few of the weatherboards are rotted too…. so i was thinking of fixing them but if i do that then i have to paint the house….and because i live in another country it would cost a bit $$ if i just leave it ..the problem will just get worse and i have had a bit of feedback from prospective tenants saying the street out front is a little busy and a front fence would be needed for the safety of there children and at the moment i have a hedge out front that apparently looks terrible acting as a fence but of course tenants don't look after it so it is not appealing….and tenants i have had in the house over the last year and a half have not been good tenants with paying and loud party's annoying neighbours and so forth …so reason for renovating with fence would be to try and appeal to family's instead of the young ones that seam like bad news
Main objective is you PPOR. If you can manage the min mortgage then do not sell it. Looks like a good growth and nice rent as well.
Do renovate though. That would attract more renters and possibly higher rent rate as well. So your cost on renovating is not a loss.
If the income from this property is not enough to help your PPOR then maybe refinance. If that doesnt help either then sell it.
the reason for selling in the first place is i figured that what i make from investment property would save me $170,000 in interest on ppor and we would pay our home off in 3 years then we could go crazy and buy more investment propertys…but now i am looking into the refinancing option see how i go
To do all the things you listed would be well over $10k. probably closer to $15k.
Now that we have a better picture, I would say:
1. Fix front fence for safety.
2. Tenants know full well the noise factor etc when moving into houses on main roads so don't worry about that. (don't ever buy one like that again; look for quiet streets and courts).
3. Put in the split system.
4. Don't worry about the yard; tenants never look after them. If they do; bonus.
5. Painting and carpet inside will be $5k or more; wait until the next tenant if you must do it.
6. Carport and boards unless a hazard can be left as is.
7. Removing a wall won't raise the rent. You may like it, but the tenants have already seen it as is and are living there.All of the repairs are tax deductible; the fence and the heater might be seen as capital works, so are therefore a depreciable item. At the end of the day, they will all cost you less due to the deductions you receive.
Uless you can get a reasonable rent increase after at least fixing the fence and a heater, and especially the painting, then it's not worth the effort.
I would just do the front fence and the heater for now, and put up the rent with the next tenant.
In the mean time; use your extra cashflow from the IP and any other spare cash to hammer the PPoR loan.
By selling this IP, you wll be up for cap gains tax as well as the selling costs and the buying costs of the next IP. And, the loss of cap growth from this existing IP until you buy another one.
Long term, you are more likely to make more cap growth from the IP than you will pay in interest on your PPoR; especially if you are reducing the debt asap.
Firstly its not on a main rd…its on a side street that is just what 2 prospective tenants said as i asked them for feedback (front fence)as the property has been vacant for 2 months…….bad time over Christmas for a house to be vacant to i guess…with the investment property although its positevly geared i dont have any extra money from it to put on ppor…because the investment house is old every 4 months i am paying a plumber or electrician to fix something…….i pay investment loan of $105 every week and when its rented i get $160…..rates are just over 1,000.
last year i sent over 2,000 because of vacancy problems throughout the year… and the 2 years prior i sent over 1,000……so in 3 years i have not seen any money from itwith my ppor i am trying big time to pay it off as quick as i can but finding it very hard…..so far we have paid $30,000 in extra payments…… i got a statement the other day hoping to see a real difference in interest paid but was highly dissapointed as in 3 months we have paid a extra 10,000 with one interest rise in that time the interest i paid in 1st month was 1,100 nest month 12,00 next month 1,300…….ohhh i wasnt happy…i feel like i am paddling up stream and going backwards…ohhhh i messed up with my figures if i sell investment i will pay ppor off in 6 years…hmmmm
another thing i was thinking of doing is wait til the growth of investment reaches the balance left on ppor
Kristine wrote:Firstly its not on a main rd…its on a side street that is just what 2 prospective tenants said as i asked them for feedback (front fence)as the property has been vacant for 2 months…….bad time over Christmas for a house to be vacant to i guess…with the investment property although its positevly geared i dont have any extra money from it to put on ppor…because the investment house is old every 4 months i am paying a plumber or electrician to fix something…….i pay investment loan of $105 every week and when its rented i get $160…..rates are just over 1,000.
last year i sent over 2,000 because of vacancy problems throughout the year… and the 2 years prior i sent over 1,000……so in 3 years i have not seen any money from itwith my ppor i am trying big time to pay it off as quick as i can but finding it very hard…..so far we have paid $30,000 in extra payments…… i got a statement the other day hoping to see a real difference in interest paid but was highly dissapointed as in 3 months we have paid a extra 10,000 with one interest rise in that time the interest i paid in 1st month was 1,100 nest month 12,00 next month 1,300…….ohhh i wasnt happy…i feel like i am paddling up stream and going backwards…ohhhh i messed up with my figures if i sell investment i will pay ppor off in 6 years…hmmmm
another thing i was thinking of doing is wait til the growth of investment reaches the balance left on ppor
Sounds like your heart is saying sell.
It's all good; not many people get to put a big chunk of cash on their PPoR.
Just make sure you get back in the IP game asap.
not really i just want to do whats right …. what will benefit us better in the long run….and what that is i aint sure …but i do know that my thoughts are up and down like a yo yo so i am thinking that i am unsure about selling and i am thinking that if i feel that way then i shouldnt sell……todays thoughts are to get more $ from investment property loan up to amount i feel comfortable with…the investment loan to cost me 160 per week payments and spend $$ on the place fence split system carpet and put rest of $$ on ppor…i am worried that i may miss out on extra growth with investment property….who knows in another 3 years i may be able to sell it and pay ppor off totally
not really i just want to do whats right …. what will benefit us better in the long run….and what that is i aint sure …but i do know that my thoughts are up and down like a yo yo so i am thinking that i am unsure about selling and i am thinking that if i feel that way then i shouldnt sell……todays thoughts are to get more $ from investment property loan up to amount i feel comfortable with…the investment loan to cost me 160 per week payments and spend $$ on the place fence split system carpet and put rest of $$ on ppor…i am worried that i may miss out on extra growth with investment property….who knows in another 3 years i may be able to sell it and pay ppor off totally
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