Hi everyone,
Help! I am in a dilemma and need some advice from more experienced investors, to help me make an informed decision……
We own a 3 acre block of vacant land (unfortunately it cant be subdivided further) and we have an offer from a buyer for $135,000. It was bought 2 years ago for $117,500 and as it hasnt shown strong capital growth over the past 2 years we decided to place it on the market for sale, to free up money to enable us to invest in CF+ve property. After all expenses we will be left with $35,000 to reinvest. We stand to make a small loss on this deal.
This is the only asset we own and after all the reading and researching we have done, we are keen to build a property portfolio so we aren’t in a position where we both need to work full-time. Should we sell and make a small monetary loss and invest our money elsewhere (as we see $35,000 as being a deposit on two residential properties) or hang on to it, continue to pay the mortgage for it out of our pocket and hope for the capital growth in the future?
We are a DINK couple earning $130k per year.
I read this site with great interest – thanks all for your postings!
S&D
Personally, I’d be asking: what’s my goal?
you’ve identified it as being “in a position where we [don’t] both need to work full-time”.
Do you see holding a non-performing property hoping for capital gain as moving you towards your goal?
For me, if I could see a valid reason there may be growth there in the near future, I’d possibly hold it if it helps my goal. If not, I’d check the numbers for developing it – would they get me more money to reinvest in CF+ property? If not, I’d sell it and take the loss after checking the repurcussions with my accountant.
But, it’s your goal. Only you can really tell if this is moving you towards or away from that goal.
Good luck.
100% of the shots I don’t make don’t go in – Wayne Gretzky
Is it worth building on it?
Then renting or selling for a better profit?
If you hold it can you reasonably expect growth? You need decent growth to make up for the shortfall in rent and tax deductibility I think.
Land is seldom a great investment unless you can resell easily or change it by building or subdividing.
I suspect you need to write down some goals then plan some progress towards them. Asking this question wont help you achieve your goal unless you know what it is.
All the best
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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.
Hey there!
I agree with the goal sounding board…. if you keep it … does it get you closer to your goals or take your further away.
DO you know the value of the land??? (other than what the buyer is offering?).
Make sure you know what it is worth before you sell it as you may be getting well under market rate for it.
Since we are adults and have to live up to our responsibities… If you made a mistake buying this one (which is ok by the way … as you have now made a difinition in your property training and will learn from it to improve and fine tune your expertise!)… then just admit it and move on… take the loss on the chin and get cracking on the next deal to move you toward your life goals
‘Cut your losses and let the profits RUN!'[strum]
Cheers
KiwiWhy Rent? Rent 2 own!
http://www.rent2ownaus.comI would have to re-iterate the earlier comments about assessing your goals. If you want to build a property portfolio to replace your income, then you need positive cashflow properties. And in my mind if you are committed about doing this then the sooner you sell your vacant land(earning no income) and start buying CF+ properties (earning income) the better!
As it looks, $35k guaranteed cash in the bank versus some POSSIBLE future capital gain that you have no assurance over what might be, is a bit of a no brainer I think. Dont rely on capital gain – it is a bonus.
I suppose you can ask yourself this question – if you held this property for another 2 years and it did not appreciate at all and you paid down an extra say $20k in mortgage payments over this period, woud you be happy with the result or regret it and be disappointed that you waited another 2 years to act? Capital gain is uncertain, your $35K now to get you started with other properties is guaranteed.
Positive Cashflow NZ Properties
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[email protected]Hi,
Thought about buying a mobile house for 60 grand and putting that on the land and getting in atleast some rent so you can make some good tax deductions. If it is your only asset make sure you have filed a withholding declaration (depending on your income) so you won;t feel the pinch week to week. Sounds like you may not have gotten the location quite right.
If it was mine I would draw out the equity and use that money to buy another investment. All property mistakes heel over time. You havent held onto it for long enough I think,
investigate other options and good luck.
Think outside the square and dont restrict yourself to a few ideas.
Good luck[biggrin]In reply i’d say , don’t expect someone to give you the answer ,as it has to come from within you as your situation is unique to you. But hopefully i may be able to help. A personal experience. For personal reasons I decided to sell a home at a small loss as in the market at the time nothing was moving. I had done research and had found a nice little 4 bed, brick nd tile, good price and value, better area, i felt it was better value. Doing the deal put me in a position where i was able to be positive geared. It never missed a days rent and improved in value nicely. The home i sold has improved similiarly to my new one, but i am happier and contented with what i did. The Fireman
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