Hi guys,
I am a newby here, and trust I can learn heaps from all the old foxes …
I have an IP in the Blue Mountains, NSW (current value 310k) that I used to live in until Dec 2005. Possible weekly rent is 250 according to agent, currently rented for 240, so the return is quite low in regards to what the place is worth.
As I had paid the loan off to zero a while back I am currently not claiming any loan expenses against it.
Is it worth keeping this place (and somehow use the equity to buy more property) or do I better sell this place and get an IP that has a higher return, as there doesn't seem capital growth to be in sight?
Your thoughts are greatly appreciated.
Regards
Roger GTownI don't have an opinion one way or another about whether to keep it or sell it. Remember some money is lost in the selling and rebuying process. Here are some options to throw in the mix:
If you keep it, you could get another IP with a big loan on it so that it makes a spectacular loss, and you can offset the Blue Mountains income against it.
If you keep the Blue Mountains place, have you considered renting it as a holiday rental instead of regular? You could register on http://www.stayz.com.au … it might make a better rental return by doing this.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM,
Holiday rental doesn't feel like the right thing to do. I'm too far away to manage and keep an eye on that.
I like your suggestion of borrowing against its equity to get another or more IPs.
Can I somehow use the equity I have in the Blue Mountains property to finance the deposit for the next IP? Is getting a loan the only way for that or are there other finance tools?Regards
Hi Roger,
You can use the existing property as security in addition to the new property when you apply for the loan on the new one. (This means you can potentially borrow 100% of thew new property if you so wish).
Make sure you put some time into deciding on a good home loan lender as your best option is to continue using the same lender for any future property purchases (This is because that lender will have a mortgage over the Blue Mountains property).
It is possible to refinance to another lender down the track, but it can be quite costly and inconvenient depending who you are refinancing away from.Regards,
YI.So don't manage it yourself. Outsource. One option is to get a local realestate agent to manage it. The other is to operate thru the stayz website, hire a local cleaner and put a combination lock on the front door she changes for each new tenant. Take payments on credit card and people are unlikely to trash the place (since you have their creditcard details).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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