Hi there,
We bought an investment property (triplex) development site in the boom in a town down south (paying a heafty mortgage on it).. we lost about $150k in value…we bought for $550k now worth about $430k…We are now pretty hamstrung… can't invest any further because we borrowed even more (on top of the above).. and that was spent (who knows where!)
What should we do?…do we hold on to it till the value gets back up? The interest we are paying is about $40k a year.. is it worth it.. should we cut our loses and sell it at a major loss???
Need help…
Hi pinwheel
Whether or not you decide to sell it at a loss really depends on what you would do with the money if you did sell? Also, what is it renting for at the moment? Are the units strata titled? Could you strata title or renovate them to increase value?
The only reason I would EVER sell in a market such as this, is if I thought I could make more money elsewhere when the market storms back. What you should NEVER do is sell in the slump, and then get scared off investing and miss the upturn.
Also, is this property rural? Whereabouts down south? Do you think the price you paid for it was accurate at the time? Or did pay above market for it?
If you do decide to sell it, then contact me through my website
http://griffin.buyhouse.net.au
Good luck!
Andrew is pretty much on the money. However, your total position has to be taken into consideration. If you sustain a loss of that size, can you wear it? And if you can wear it, what will be the probability of being able to invest in the future? One of the things that a lot of people get wrong is that they sell when things are bad, and they don't buy back in until things are a little better, therefore missing out on potential upside.
But your answer really comes down to if you sell, can you make the money back up faster elsewhere (if no, hold), if you can make the money up elsewhere, and do it faster, then it may be worth it otherwise you'll end up with a very large hole to fill, and no way to fill it.
I would seek some help from someone, tell them everything so that they have a good perspective about what your various options are, and work out a plan on what to do.could you rent to buy them? Might get you some cash behind you to reinvest and the loss in value might be made up over the term of the rent to buy?
Hi Pinwheel
Fin Spec is spot on. Could depend on a range of things as to what the best option is. If you structured it under a company or trusts or something like that, there might be a couple of tax tricks that may be possible. A Financial Planner or Tax Accountant would be the one to see.
Good luck with that!
Propsa
The site has an old house on it.. and I have yet to subdivide the property… into three (the existing house will have to go)…we are planning on putting a subdivision application through the system (but was told this only just makes it more attractive rather than more valuable)…
It was bought in my husband and my name..
We run a business and our mortgages are causing our business to bleed (husband takes alot of money out of it to feed the mortgages) and we therefore do not have any money to reinvest in our business which has the potential to make up for the hole…
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