We are relatively new to the investing scene, but do have 3 IPs at the moment. Our problem is that we need more cash freed up to continue purchasing. We are now short on cash for deposits because we have borrowed against equity in one house and therefore have exhausted our funds. And because the other two houses are “way out west”, the capital gain is just not there.
We are considering selling one house to free up some cash/equity. Gross yields respectively are 10.4%, 9.75% and 7.5%. COC returns are 1.5%+, 2.2%- and 8.2%-. The obvious one to sell would be the “under achiever”. Does anybody have any ideas on what we could/should do or is selling the right option? I know the COC returns aren’t great, but we’re trying.
Any comments would be greatly appreciated.
Just giving gross yields and COC returns does not give much to assist you with.
Do either of the properties thata re negative have potential for capital growth? What CG do you consider they will have?
If you sell one house are you going to be in a position to buy more than one and if so will the total return you get better that of the house you sell?
Ultimately the decision is yours. The “right” answer will vary for most of us depending on our own circumstances.
Are there things you can do to increase the value of any of the properties?
I’ve spent part of the weekend number crunching to look at expanding my portfolio:
a.do I keep X and refinance it to acquire Y
b. do I keep X and develop it
c. do I sell X;
d. do I look for a partner
and various combinationsSo far I’ve got about 12 permutations, say 8 of which are feasible, and a couple need more information.
Bear in mind that you’re going to have selling costs.
You may want to see if the owner is open to owner financing so that way you won’t have to borrow as much funds. Also consider doing some no doc/stated income loans to see if that will help you out as well perhaps allowing you access to more funds. If the property your looking at is selling below appraisal value take out the loan based on purchase price and use the difference between the appraisal and purchase price to restructure some of your finances.
Get my 2 cents
The Mortgage Consultant
[email protected]renaeg
Don’t be too impatient!
If your properties have no potential for capital growth, if may be better to sell them now, and reinvest into something better.
Otherwise, just keep saving for the deposit on the next ones.
Terryw
Discover Home Loans
Mortgage Broker
[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
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