I have a set of three units purchased for 185,000 18 months ago. I am told they would currently sell @300,000. The current rent is 395/wk. I can refinance them and remove 49,000 in equity or I can sell. These units are @25 y.o. and are in need of carpet and building works. I am getting different advice from accountants and advisers can someone give me thier experienced opinion?
G’day Deborah….
You keep asking my favourite Q’s.
If they are Strata Title…keep them.
If Company title SELL.Please clarify as to title, location etc
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]You could always tell us where they are located and if suitable i could solve your problems by taking them off your hands… [
]Cheers,
Paul…“The only thing you get from looking backwards is a sore neck…”
Now you’re talking Paul.[
]Bill, why could not Deborah change the title if in fact they are company title and she owns the whole lot? I have been told (I could be wrong of course[
]) that it’s not that hard to change from Company title to Strata Title.Deborah, the properties sound like they are well and truly paying for themselves (did you borrow 100% – I’m guessing yes). Even if you borrowed the extra equity they’d still have to be looking good! If you used that money to do the building works, and replaced carpet etc. could you then raise the rents?
If you do sell you will have capital gain to pay. Personally, I’m with Paul – a bit more info and i might buy them![
]Cheers
Mel
Personally, I’m with Paul –Wow, the things i could add to that with some creative quoting… [
]Mel, as for changing title sometimes it’s not that simple – it seems to me that every “expert” you talk to has a different view… My last 3 visits to council have me ready to go insane !!
I want to build a “triplex” on my existing property and the guys dealing with it at council can’t give me a straight answer… []Cheers,
Paul…“The only thing you get from looking backwards is a sore neck…”
Why sell? You would have CGT and agents fees and then you would only buy something else with the money again, so more stamp duty etc and you would miss out on any future capital growth. I would probably keep them, increase borrowings every 6 months or so for more investing.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Sounds like you shouldn’t sell Deb, i mean, they would definately be positive casf flow, and it would seem that the new carpets etc would also pay themselves off eventually, especially if you can raise the rents after installing them,
Fudge111
[
]Hi Deborah,
I certainly wouldn’t sell for all of the above reasons. They sound like a great investment. We have renovated a few units and once they are stripped out, even if the kitchen doesn’t need a complete replacement, it’s amazing what a good clean, paint, carpet, light fittings and blinds will do, and a gain in equity. And like someone said, no doubt you would be able to raise the rents too.
Depending on where you are you can get competitive prices on what you need to renovate if you shop around.
Anna
Thaks for all the return messages its great to get impartial feedback. How about if these units also have a body corporate fee of 708 per quarter (for all three)? [?]
Hi Deborah,
A few questions too get a better understanding of the situation your in. How many units are there in the block? How much are the expected costs for carpets and building works. Are these being instigated by the body corp or you? What time frame do these repairs need to be carried out in? On the limited information so far I think holding is better. Also do you have the funding to do the repairs?C2
“Is it true the more you owe the more you grow until the bank steps in?”The carpets will cost 8,000 the floor will cost @10,000 and there are five units on the block the other two are separated from mine and it is not a body corporate repair or improvement
Okay, are there any reno’s out there that can do a cost comparison and find a way to bring Deborah’s costs down? Have you thought of refinancing and using some of the equity to do the reno’s. Now we need a broker and an accountant to jump in and help with refinancing and tax options.
C2
“Is it true the more you owe the more you grow until the bank steps in?”If that is $708 per quarter BC for all three inclusive, that is fairly cheap. I am paying in some instances more than half that for only one unit. If it’s each then – ouch!
If you do refinance to pay for the refurbs, the interest is still tax deductible as it is for investment purposes. I would definitely be looking at increasing the rent after this though.
That way it’s no out of pocket expenses, and hopefully the rental increase will more than cover the extra loan payments.
Cheers
Mel
]
]
]) that it’s not that hard to change from Company title to Strata Title.
]
]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
