i have 3 blocks of land valued at 130k, 85k and 35k. these have doubled in the last 3 months when i bought them. while the return is fantastic my repayments leave me 200 dollars a week short. i support this through me line of credit loan. am i doing the right thing in keeping them till i dry up the entire line of credit then selling them.
i look forward to any suggestions….
thank you,
damonPos cashflow isn’t the only way to make money.
You have done a fantastic job so far.
Whilst there is any prospect of more remarkable growth then what does $200 pw matter?
Remember that if you hold them for 12 months or more the CGT is halved. This saving will well and truly make up for the cost of holding them that long.
When you do sell you will have enough deposits for many cashflow pos places if that is the strategy you wish for.
Well done!
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
There is a lot of options but that would depend on where they are, whether you own or rent a home, whether you have a high income job etc etc.
I would guess keep them if you can, maybe build on one and rent it/live in it, sell the other 2 in 9 months.
Maybe sell two now to pay off the one likely to grow in equity the most, and keep it to build down the track a bit, live it a while sell it and pay no CG tax.Damon, you say they are valued at $250K, yet your debt is only $125K, and it’s costing you ‘just’ $200 a week to have created $125K in 3 months?
Why don’t you build a house on the one where building costs would be least (for a good house though), and then rent it out – hopefully for enough to cover the extra loan repayments (building loan) AND your $200? Failing that, you’ll still be able to claim depreciation etc. on the new building, and could claim the interest for that land in your tax, so the taxman would go some way towards paying for your investments.
If you really can’t afford the repayments, then sell, but it sounds like you have a buffer in your LOC and can probably afford to cover the payments for a while. I’d look at doing that personally. But I would definitely look at building a house.
Cheers
Mel
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