I have some properties that have either been poorly managed or were naive purchases in the first place. Eg one is a house in Brisbane that is losing a lot of money annually on interest and maintenance. Another is a renovators delight in the inner west of Sydney that will need at least $100K to get it up to scratch. A third is a piece of land in the Blue Mountains that is difficult to build on.
In short i want to sell these as soon as I can and invest in better quality property. But now is not the time to sell. Should I just cut my losses and sell anyway? After all now is a probably a good time to buy.
I would be interested to hear other people’s opinions…………My husband and I are in a similar situation. Our goal is to be able to give up our day jobs and renovate old houses, buy houses on large blocks and subdivide, undertake small-scale residential development projects, etc. But, we are fully maxed out on all our properties, and the areas our properties are in are either stagnant or have dropped by around 10%.
I read somewhere that if you do a review of your property purchases and ask yourself the question “Would I have purchased this property knowing what I know now?”. If the answer is ‘no’ then you should offload the property. That scenario is certainly the case for one of our properties. We bought a dump in a beachside suburb in Newcastle, at the height of the boom. We had always aspired to buy into this area because it is such a desirable location and historically had shown solid capital growth of around 12 per cent p/a. We knocked the old house down and built a new house, with the intent of on-selling. Problem is, the market dropped not long after we bought the property, and we would end up making a loss on the property.
Since we bought the property, we have learnt that the way to make good gains in this particular area is to buy an old house on a block that would allow for a duplex and go for a dual occupancy development. We have considered ‘cutting our losses’ and selling the property so we can pursue other prospects, but it would cost us around $90K in GST, agents’ fees, CGT etc.
So, we are forced to ‘sit tight’ and wait for the market to pick up again. It’s absolutely killing us, because we see so many opportunities and are so keen to get stuck into the renovating side of things, but we seem to be just drifting. We know now is the time to buy and get set up for the next peak in the market, but we can’t do anything!Cheers,
Novo.
Thanks for your reply. Part of my problem was that I lived overseas, and consequently bought quickly with the idea that any property purchase would come good in time. Foolish! Now I want to off-load three out of four! They are all in seemingly good areas, but are costing me money. Perhaps just reducing the debt is the best plan at the moment.
These properties will probably go up in value again. All good locations. Its a hard decision to make.
Can you afford to hold on to them?
Maybe you could sell one to start with and see how you go???Terryw
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Bristow,
Have you talked to your accountant as they maybe able to suggest rather than getting your tax refund once per year the accountant can fill out a form and get your refund each pay that might help your financial situation.
Are there any depreciation schedules on any of your properties?
Or like Terry suggested see how you go after selling one.
Good luck
Jenny1
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