Hi.
We bought our 1st investment pooperty 12mths ago, its been in negative rent the whole time, we were wondering if we should sell, or buy another to maybe cover all the costs.Wannabe,
Just a couple of things to think about!
Has your IP grown in value? Can you unlock the ‘equity mate’ to purchase a positive cash flow IP to cover the current cash flow loss?
Selling means expenses like: CGT, legal costs, RE selling costs, etc. Is it worth it?
Can you aford to carry the current loss and still be in a position to buy positive cash flow properties?
Hope this helps …………. Rae [8D]
Cash chick, help me out here, the language is new to me, we could use the equity in our home or the investment home to buy another,we can’t afford to keep putting in the extra each week for the 1st, hence the thought of buying a 2 nd , to maybe cover all costs on both.
let me get this straight, you cant cover the cost of one investment property, so you want to buy a second one to make up the difference?
what happends if you dont find a tenent for the second IP, or if both IP’s become vacant!?
NEO
NICE ONE BRUVA!! Nice One Bruv! nice one
Neologism, thanks for you reply, that is also a line of thinking, hopefully the 2nd IP would be much cheaper , so rent better, to cover it & also have enough left to top up 1st IP & yes no tennants is another problem .
wannabe: No offense mate, but your logic seems abit flawed. Firstly, your 2nd IP would have to cover its OWN costs first. Secondly, you are then hoping that the positive cash flow from the 2nd IP will cover the costs of your 1st IP?
Mind sharing the negative cash flow (per week or month) on the 1st IP? That way we can get a figure on the kind of positive cash flow you need to make on your 2nd IP.
Cheers.
Hi OlorinSledge, thanks for your reply, no offence taken ,i’m looking for tips, thats why i came on site, we would need $40 week from 2nd IP to cover 1st IP, if this sounds unrealistic & can’t happen we would need to sell 1st IP, then where do you start again so as to be positive IP?
Wannabe,
Is there anyway you can improve the property with little cash input so as to get a better rental return? I mean things like just repainting or getting the garden sorted out? I could be that the IP just needs general tarting up so as to attract a better rental source.Maybe $1000 invested there will give you an overall better cash flow.
Cremo.Here for a good time not a long time, just do it!.
Wannabe, what does this IP comprise? Is it new or old, and in what area is it located?
Hi Cremin, no the IP is new & fully furnished, we would remove the furniture if needed, but the tennants want it left, we made the mistake of buying an expensive IP ,listening to agents telling us what rent it woukd get, but it hasn’t, now the decissions to keep or sell or buy cheaper 2IP in hope 2 IP can make positive cash flow to help 1stIP
Wannabe: So atm you are running a $40 loss per week on the 1st IP? I guess if you are having difficulties financing this, then you might consider selling or wrapping your 1st IP. Both will involve CGT so its up to you which one you prefer.
If you can wrap it, make sure it covers the $40 per week (and preferably more). However, I’m new to wraps myself… so you better ask others regarding that.
PS. As neologism said – I’d be very weary of getting a 2nd IP to try to cover your 1st IP.
OlorinSledge:thanks for your reply, i’m not much into wraps, sounds harder than what we’re trying to work out now, selling may be the option, do you buy under or around &100,000 so investment is positive?ours was closer to &200,000, we only have 10yrs to get these IPS, as we have been told to old after that, can only take our loans for that time frame.
OlorinSledge:thanks for your reply, i’m not much into wraps, sounds harder than what we’re trying to work out now, selling may be the option, do you buy under or around &100,000 so investment is positive?ours was closer to &200,000, we only have 10yrs to get these IPS, as we have been told to old after that, can only take our loans for that time frame.Wannabe: I’ll be honest mate, I only have 1 IP myself and its negative cashflow atm as well. So I’m pretty much in the same boat as you except I can cover it pretty easily. I’ve started looking for another property, with the view for positive cash flow – however its pretty hard. I think in your situation, you’d be looking under 100k (me too).
However, ask some of the other people in this forum who have more experience then me – from what I’ve read so far, these is a huge wealth of information here.
Wannabe,
Keep the property, refinance for the full value at the present, take some money out, seeing that you have equity and buy the second IP and use some of the money to offset the first IP?
May be this would work, just a thought?
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