Hindsight is always interesting.
One wonders what advice Kaus would have received on this forum in 2003 if he/she had asked the question then?
I suspect someone asking whether they should take a punt on a 100% loan for their first IP with a negative ROI on purchase would have got a bunch of "you go girl/boy!", "you're on your way!" high fiving rather than any balanced explanation of the risks involved.
It is stories like Klaus' that highlight the need for newbies to look beyond the purely woo-woo, evangelical view of property investing and understand that that (a) it is an investment and all investments have downside risk and (b) you're becoming a landlord, not the landed gentry.
Yossarian wrote:Hindsight is always interesting.One wonders what advice Kaus would have received on this forum in 2003 if he/she had asked the question then?
I suspect someone asking whether they should take a punt on a 100% loan for their first IP with a negative ROI on purchase would have got a bunch of "you go girl/boy!", "you're on your way!" high fiving rather than any balanced explanation of the risks involved.
It is stories like Klaus' that highlight the need for newbies to look beyond the purely woo-woo, evangelical view of property investing and understand that that (a) it is an investment and all investments have downside risk and (b) you're becoming a landlord, not the landed gentry.
Good point. I bought my first IP before i found this and other forums. Although my IP ticked a few boxes and will be OK long term. I believe i could have done better. But i guess another way to look at it is if i didnt buy a IP. I probably never would have started looking at these forums anyway. So i guess you can use your first purchase as a learning expieriance. Many do.
Dear Sati,
Whilst the situation is not good you can learn valuable things from this experience that will likely put you in good stead to make better decisions in the future. All good investors have started somewhere and also made mistakes.This is obviously very damaging to your cash flow, I assume that selling the IP is not an option for you, i.e. that you do not have $30,000 in capital to repay the bank loan upon the sale.
If this is the case, improving the properties cash-flow may be one of the few options available to you.Would you receive a better rental if you rented the property by the room? A lot of people do this to increase their returns. You may find a local agent that will manage this for you, if not you may need to up skill yourself to do this.
Is the valuation low because of the condition of the property? I.e. if the property is very run down then this could dramatically reduce the valuation, especially in today’s market. What would sprucing the property up entail? What would it cost and would this improve the value to at least to a break even point. I would at least investigate this so you understand all of your options and also to improve your knowledge about the property.
After thorough evaluation if you found that by spending $10,000 or so, there was a good chance of selling the property to break even (after considering all costs), then maybe a family member might help you out. Obviously, this strategy would involve a lot of research and should not be chosen lightly.
Maybe people of the forum have some more positive tips for you??
Chris White | Pillar Property
http://www.pillarproperty.com.au/
Email Me | Phone MeThe Property Investment Specialists
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