I purchased a neg geared property in St.Kilda 18 mths ago. A studio apartment, $125,000 with loan of $135,00 (fees etc.)it’s costing me approx $240 per month after rent.(too much!) It is now worth $145,000 approx. I was so proud of myself when I bought it, I thought then I was on my way to financial freedom. I am half way through Steves book and realise what a burden it has become. My partner wants to sell. Should I sell and start from scratch? I want to make money not spend it.
Anyones opinion would be grateful.
KarenHi Karen,
Steve would be able to answer this better than me. However, I purchased property in Canberra and the market went very south (thanks John Howard). Anyway, I rationalised and stuck with them as the rent was high. Although I could have purchased them a lot cheaper a few years after buying them. The answer to your question is that I believe it will cost you money to sell, however if you can find a better investment (positive property) I’d be tempted to cut my loses and run and learn from your mistakes. I’d be a bit dubious about the Melbourne market. Maybe you could find someone that likes your property and organise a lease or wrap. negative to positive in one hit.
Steve, what do u reckon???
Spider
Hi,
(post moved to PropertyPlus)
Welcome to the community and thanks for posting.
Despite what many people think, I’m not against the idea of negative gearing… I just think that it’s a strategy that only works when the market is rising.
Karen, in your case the lesson to learn here is that you went into the property without your investing eyes wide open, and seemingly without and structured plan.
As such, your investment is largely out of your control as you need to rely on the market to continue to rise, which can be very frustrating.
Using your figures, $240 * 18 months = $4320, yet your property is only worth +10,000 more than what you paid (nett) – and your sales price is before selling costs.
Only you can decide whether to sell or not, but your decision needs to be planned rather than a knee-jerk response.
What I’d do is set a benchmark return I want to get, and if, after a few months, this cannot be achieved and does not look likely, then it might be time to cut your losses and start again.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Thanks Spider, thanks Steve, I think I will quickly assess this situation and give it some more serious thought about selling. Another hinderence of this apartment is I need to apply for low doc loans now and trying to re-finance this place has given me nothing but headaches. It’s too small (30m2)and alot of lenders won’t accept it espcially as a low doc loan. Time to cut my losses perhaps?
Karenfreedom-please
Hey Karen
Go with your gut feeling
Spider
freedom-please
[/quote]Karen,
You made 20K on your purchase price in 18 months- that’s pretty good :o) Never mind the tyrekickers- you’ve done ok, given the state of the market in inner-city melby. Also- you didn;t overcapitalise to begin with- 125k is a cheapy.
If you can sell now- a 30sqm apartment could be more of a liability than an asset- then sell, I reckon. find some cashed up person who did well from the boom, and sell before the innercity melbournites panic and your capital gain disappears.
kay henry
Karen, I agree with kay henry, take the money and run! (Bearing in mind the current state of the Melb market)
And, although I sell properties for a living, why don’t you look into selling it yourself rather than using an agent, to maximise your gains? It’s not that hard!!realtor
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