I havent been on this site for over 12 months and with all the opinion about the state of the housing markt and its futue direction (both short and long term) i would appreciate any advice based on my situation.
I bought 1st and only I.P at what turned out to be near top of cycle in 2004.
Valu now around $275,000 with I/O debt of $288K (sad story i know). The original plan was to wait for capital growth to provide equity for first PPOR which i would be eligible for FHOG.
My thoughts are at the moment that house prices may spike in short term following recent announcements to hopefully a point where i can cut my losses now and sell and payout loan and start again down the track, based on the opinion that following June 30 2009 and beyond that prices may come back more.
Investment property is in Wollongong NSW but now live on Gold Coast where i would be looking to buy.
Other option would be to use grant to buy PPOR within 6 months and hold on to Investment property at same time although this would be stretching the casflow as I.P is negatively geared.
Appreciate any thoughts on the order i should do things.
Matt
If you can find a property for the right sort of price on the Coast then $14K should go a long way towards the deposit and your costs so why not retain the IP and even look to take the new PPOR out on an interest only basis to reduce your cash outflow.
Personally i am not a believer in selling assets (other than when doing a development) so i would be hanging in for the long term with the Woollongong IP. Have you maxed out your claims in Depreciation and Building Write off's from the IP.
Are you able to get a new QS report done to see if there is anything else worth claiming ?
Richard Taylor | Australia's leading private lender
Thanks for the advice Richard, although doing the sums might have to wait as my income start to improve as serviceability would be an issue to do both
A couple of questions for anyone out there;1) After June 30 2009, is it to be assumed that FHOG will revert back to $7K.
2) i Can see with some of the initial hype that prices may steady and/or rise in the immediate futue but do people think i will 'miss the boat' in terms of next boom if i have to wait 12-24 months before being able to take the plunge on first PPOR ?
3) In terms of the Investment property i hold, i had to repay the $7K grant in 2003 as i got the grant with intention to move in within 12 months but was poorly informed and my circumstances changed so never moved in. The fact i had to repay grant back then and have not bought since, would i be entitled to grant next time around ?
Hey Matt
Can help with some of your questions..
I'm certain that the FHOG will never apply to you again… next house will not be your first. Unfortunate for you. New FHOG will not apply forever, but not sure how long for!
Re Wollongong, we live 40 mins away. Is there any possibility of improving your IP there, eg reno, add bedroom eg from second living area? Or even add granny flat (increase rent, more attractive to another investor to buy.)
My view on an IP is sometimes you need to get out of a poorly performing property, to get into a better investment.
In your case, it means realising a capital loss. Which may be worse than you think, ie may be vacant while on the market, agents fees, sell for less than you expect. (We have recently sold a local property which was $279,000 18 months ago. For $225,000) So be realistic before you put it on the market, if you choose to.Another possibility (and my view for short term) is what if property values drop? I think that the FHOG will not make prices rise, but may stop them from falling more than a bit. Maybe new houses will sell a bit better with the new FHOG. If prices drop, would you then wish you had sold this year?
There's not too many buyers out there, which is why prices are not so good.On the other hand, your rental has to be going up, ie improving the return from when you bought it.
If you do buy again, think thru your strategy as it's not easy to make money in real estate at the moment. (Having said so, I own I.P's too.)
Good indication of next boom will be when prices start to rise. Very hard to pick the bottom of the market.
Quickchick.
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