Good Morning all,
We are keen to get started and have been reading both Steves and robert Kiyosakis books with great relief that what I’ve believed for so long is possible.
Our problem is that we have all our equity tied up. We have 2 properties total value around $600k and mortgages of $290k. They are both let returning $460/week less costs.(not that good a return on the value althogh it covers the loans,((Steve they are both in Ballarat)),).
My question is do you think that we should sell and use the equity to purchase multiple properties,(or is ther a cgt impication here) or do we borrow aginst the equity to avoid cgt.
We are at a crossroad with our decisions and would like some input from anyone who has moved past this point or knows how to proceed.Regards
Mark and Dot
Depends on lots of things.
What you paid? When you bought? Income you earn?
I would speak to an accountant to find out what the tax implications are for selling and what that would cost you.
Remembering if you do refinance working on 80% of market value, leaves you $480k available less current loans and costs.
So you have a nice amount to start focusing on cash flow positive deals.
In your circumstance I wouldn’t sell from the information presented. Happy investing.
Byronent
Adelaide SAHi Mark and Dot,
If you have a mortgage of $290000 and are the properties are returning you $460 pw less costs the properties are returning you $100 pw positive based on interest of 6.5% interest only. This is not including associated costs like rates, insurance,management fees etc.So it should be almost cash flow neutral. I would keep the properties as it is presently fairly hard to find these types of deals, and if it isnt an interest only mortgage I would change it to one.Good luck on what you decide to do.[biggrin][biggrin]MartinMartin
Hi Mark and Dot,
I am with Martin here – why sell something that is largely paying for itself.
To me the best decision is hang onto these and utilise the available equity for other investments.
Derek
[email protected]Property Investment Support Available.
With lots of equity there, why sell? Unless the proerties are not performing.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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Dont sell as it does act as a catalyst for capital gaoins and the tax man always has his hand out so no thanks. $600k if you got that as a bank or lender val would mean the safe 80% lend would have you at $480k lend. Depending on your servicability, an extra $190k couuld be released as deposits and costs. So what are you waiting for.
Good Luck.
DD
PS146 Certified Financial Planner
Don’t sweat the small stuff,and it’s all small stuff!!Hi M and D,
The other point I would add is the only reason I would consider selling is if I have too, I get an offer to good to refuse, if the property/ies stop doing what they were bought to do or if they have performed like dogs.
The other point you need to consider is why did you buy these properties in the first place and if they are performing as expected – which it sounds as if they are then there is no need to sell.
You will make far more money out of growth and you need growth/equity in a portfolio to enable continued forward momentum. This is what you have why sell and lose some ‘profit’ to CGT when releasing equity is so simple.
Derek
[email protected]Property Investment Support Available.
Mark and Dot,
What they said! If you can afford to hold em (and you can) then hold em. Nobody ever made money in REI without real estate.
If you reckon they’re an underperforming asset and you can do better, then draw down on your equity and go do so. Sounds like its time for number 3.
Cheers,
Michael.You need professional advice but in general terms if they are performing to expectation hold them. No one went broke making a profit.
You have to think of tax implications plus buy and sell costs. I think the median price in Ballarat is around $230,000 so you are going to pay CGT on profits plus selling costs say $7000 plus Stamp duty on your next buy. Thats about $15,000 plus the CGT. Thats more than a years rent.
I am a licensed agent who earns money from buyers and sellers. Dont do it unless it makes good senseHi Mark and Dot
with the little info you have provided if i was in your situation i’d sell and reinvest the money in better performing investments. Yes you will need to pay CGT but i’d still sell.
It looks to me like you have about $300,000 returning 0%. Not Good ! if it was my money i’d like it to be returning at least 15% (more if possible). Even if you can get a 10% return thats $30,000 per annum.
Certainly worth looking into.regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
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