OK, I must admit that I’ve made a mistake in my first investing journey.
I bought a 1br Off The Plan bedroom in Fortitude Valley around 3 months ago and starting to think it isn’t the best choice for my first investment property due to the fact of Brisbane has already oversupplied with apartment units.
It’s in a large block of 200+ high rise and It’s not due to be completed for about 2.5 years so also thinking of opportunity cost and what that $40k could be used for in the meantime.
I bought the investment property through a company (http://www.ironfish.com.au/) so wondering if anyone here know how easy/costly would it be to sell it on to someone else?
Any idea would be greatly appreciated.
SiteManager
Investing for a better future
Hi there – Ironfish sell quite a bit inner city, and FV is definitely the hot spot for over-supply in Brissie.You can contact the developer if it sold out and ask for some assistance for any interested buyers – I assume you paid 10% deposit so thats the big risk…a 1br for $400k …. wow.
Sorry to hear about this but you can also seek legal advice around nomination. If your thinking of keeping – was there a rental guarantee? if not, may be tough to rent in 2.5 years, inner city has already slowed for rentals…
Cheers Ivan
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Again it is important to do your due diligence. That means checking to see what properties are selling for. If you buy without at least checking the price it makes it difficult
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@redwood yes, I thought that they would’ve selected the best price and location for me but somehow it is not for quick CG or even CF+.
I guess it will be long time 10 years+ before it is becoming Cashflow Positive :-|
SiteManager
Investing for a better future
Again it is important to do your due diligence. That means checking to see what properties are selling for. If you buy without at least checking the price it makes it difficult
@nigel-kibel Well I guess they’ve just tricked me to buy this property for the sake of Tax benefits / Depreciation purpose.
Hence I can only wait until 10 yrs before it is Cashflow Positive.Because the suburb is close to the CBD hence it will increase in value for sure according to them.
SiteManager
Investing for a better future
Hi SM,
It’s in a large block of 200+ high rise and It’s not due to be completed for about 2.5 years
This sounds like the kind of property that they sell to overseas buyers. Could that be a market for you? Maybe approach Ironfish to see if :-
a) This can be onsold by them to an overseas buyer, or
b) Can you onsell it to someone else, and if so, thru whom?Keep in mind that if you settle on it, it is then “second-hand” thus it is no longer one that can be sold to an overseas investor – so your potential marketplace is cut in half (Aussie buyers only). I would think making every effort to find a way out now woud be time well spent…..
If it is 2.5 years before it is even built, what WILL be its value on completion?
Could it be worth $420k by then? Or $350k? If the latter, HOW do you settle, even if you wanted to? If you don’t settle, how much does that cost you? Sorry, SM – I don’t have a lot of answers, but those are a few questions that I would be asking if it were me. You may have broken an egg – the trick now is to endeavour to make it into an omelette !! ;)
Hopefully others who might have faced this very thing themselves might pop in with a few more thoughts.
so also thinking of opportunity cost and what that $40k could be used for in the meantime.
Good to hear that you are already looking at the whole situation. That could even include bailing at a loss (if so, how much loss?). And what if it would cost too much to NOT settle? What then?
Good on you for considering your position – look from all angles. A poor decision early on is recoverable, even if painful – and you will LEARN SO MUCH from it. So look on this as a learning curve – how to make the best of a mediocre/poor situation.
Benny
Sure Benny I’ll try to make best of this situation and hard lesson not to fall again to this new OTP stuff.
Thank you for the input and suggestion.
SiteManager
Investing for a better future
Wow… this is the exact same situation I’m in too! 1br in FV through Ironfish and only realizing the mistake now… Guessing it’s the Elenberg Fraser/Gurner Flat Iron building.
Due to visa restrictions I can only buy brand new for the next two years and was shown this one as a good option and while it would be better stock than other similar 1br OTP’s in Brisbane, I’ve realized that $40k is probably better off in the bank until I can buy an established house and reno it. Can’t do much with a new 1br in amongst a building of 200+ and all those thousands of other apartments that have yet to be built.
Costwise… there would stamp duty and solicitors fees. For now, I’m putting $400/wk away in case it does settle for less. If it’s worth more when it settles, I’ll simply use that money for my next IP deposit.
Check your contract as there may be something in there about not being to sell it before settlement.
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