Hi, I am a very new member and of course like a lot of people I read Steve’s book after I bought my investment properties. ( I have four )
My problem is although I did a lot of homework on area, growth, etc I was always looking for a property that would give me an income for retirement ( seven years is the plan ) not at the capital gains.
Although of course if the price is right then I would take the money and run.
So I have four properties in an city that is stable but as I said growth has not been great at 0.54% from 00 – 03, all four combined cost me approx 7K per annum negative gearing.
( my goal was that they should all be positive in a couple of years )
I have owned two for 9 months and two for six months. I can afford the negative gearing now but would like to purchase more properties.Would it be best to sell one or all of the propoerties and use that equity and capital to find positively geared properties or leave as is and look for positively geared properties when I have enough equity or capital to do so??
I want as Steve has suggested to set my goals but they depend greatly on what I do with what have.Appreciate any suggestions.
Rregards Drew
Hi Drew,
Interesting situation.
Four properties, one area, next to no growth, negative geared.
Is there something going on in this area that causes you to believe the rents will increase dramatically in a couple of years or there will be good capital growth?
Even if the rent does increase, will it increase enough to cover the present negative cash flow and provide income for your retirement?
These are the questions I would be asking myself if I were in your position.
As far as selling goes, don’t forget you get a capital gains tax discount of 50% if you own the properties for over 12 months. (That’s if there is an increase in value)
Good luck, and I hope someone else can help you more,
Sue [biggrin]“Be careful not to step on the flowers when you’re reaching for the stars”
Hi Drew,
Hold on a sec – you’ve bought all four properties in the last 9 months at the top of a boom.
Well I’m not surprised you’ve seen limited CG!
Give the market some time to recover, recouperate & move forward – say 5-8 years.
If you can’t wait for this timeframe I suggest you consider a different type of asset class – sell all your investment properties & go buy shares.
Property is NOT a short-term proposition & we are not likely to see the huge short-term CG increases of recent years for some time.
I will also say that it doesn’t sound as if you’ve bought all that well either – personally the last property we bought was 9 months ago & we’ve seen it’s value increase by 25% BEFORE taking into account the reno we’re still completing on it (we moved in and got sidetracked
)I suggest you do a LOT more research before buying in future – your first four were learning experiences, learn from them.
You have identified one of the key problems with negative gearing, there’s a limit to how many properties you can buy
In case you need to resolve the -7K on your income in the short-term, I suggest you look into buying a few CG positive properties to balance them. If this involves selling one of the ones you bought – so be it…but expect to lose money on the sale and for it to take some time to sell – in many places in Australia it’s a buyers’ market right now.
If you can borrow more (particularly if you can do so overseas – say NZ), I recommend that you buy a few CG positive places to balance your portfolio.
However always keep in mind, if you did nothing for awhile where are you likely to be in 10 years, in twenty years. If you can sit on what you have, you might find that your portfolio ends up satisfying your wealth creation plans….just not in the first year
Cheers,
Aceyducey
Originally posted by drew22:I have four properties in an city that is stable but as I said growth has not been great at 0.54% from 00 – 03
That is terrible growth, especially in 3 years!!! You must have paid well over TOP dollar for them, and well in excess of their true worth, to have seen such small growth.
I have owned two for 9 months and two for six months.I agree with diclem, I wouldn’t sell if I were you not until you have owned them at least a year (and one day) even though the CG hasn’t been such that it would not be too costly in the way of a CGT bill.
Property is not a short term investment, and to “take the money and run” as you put it, is fine if you make a profit, but unfortunately you ain’t got much to run with here!!!
Research the market a bit better next time before you rush out and buy (especially all in the same area, which is fine, but make sure you know that area inside-out first).
All the best,
JO
Originally posted by Monopoly:Quote:I agree with diclem, I wouldn’t sell if I were you not until you have owned them at least a year (and one day) even though the CG hasn’t been such that it would not be too costly in the way of a CGT bill.Heck – there’s no real CG at all!
Taking out selling costs he’s be luck to break even, so really if he wants to sell, the 12 month half CG thing really isn’t relevant
Cheers,
Aceycuey
Originally posted by Aceyducey:Originally posted by Monopoly:Quote:I agree with diclem, I wouldn’t sell if I were you not until you have owned them at least a year (and one day) even though the CG hasn’t been such that it would not be too costly in the way of a CGT bill.Heck – there’s no real CG at all!
Taking out selling costs he’s be luck to break even, so really if he wants to sell, the 12 month half CG thing really isn’t relevant
Cheers,
Aceycuey
I know Ace, but I was trying to be optimistic…you never know, miracles have been known to happen….the area in question may skyrocket overnight!!! [lmao][lmao][lmao][lmao]
Jo
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