Hi
Bought a 3 bed townhouse in July 07 for $272k.
Renting for $330 per week. Mortgage is $892 per fortnight.
Its currently valued at $300kI am not happy with the growth since its now been over two and a half years since purchase.
Townhouse is in Quakers Hill, NSW.I am not sure if I should sell it and move on or hold on and hope that it grows in value. I am sick of feeling pigeon holed as the loan is fixed and will cost $9k to break if I refinance or sell.
I am also not going to be a resident for next two years as I will be in UK for working holiday visa. So the burden of the repayments is something I need to consider. If the property was growing at a healthy rate I would hold on. So im in a bit of a pickle. I guess I feel down as I should be owing atleast two by now but alas… Reading all the good stories of people building their portfolio and me lagging does make me feel down…
Hi Des15x
Just some food for thought…..you mention not being happy with the growth – considering you bought at a reasonably high time of the market, youre not doing too bad. To compound that, remember if you sell now and break your fixed rate homeloan you have just eaten up half your capital growth gain anyway!
How long is it until your loan comes of fixed? I'm guessing between 6 & 18mths?
As far as the down bit, remember you are actually on your investing/life journey – not at the end of it. Some investors have had growth and funds almost drop in their lap, others have busted a valve and made many sacrifices……some a healthy combination!
If their is no opportunity for a rent increase, and you are finding the holding costs too difficult then you may have to sell, but if you can hold onto it, when you think of how much it would cost you to buy back into the market holding sounds better. ie TO buy your own place back it would cost you 300k plus stamp duty of $9k!
Make sure you are claiming all the right tax deductions too – as this makes a difference. All the best with the travel and whatever you decide.
CheersI also have a rental property at Quakers Hill.
Have a plan of your own.
Importantly, remember that you have one property. There are a lot of people out there with NIL. As goes for every-one's situation being much better then yours. I see Clients every day, you should here the other side.
Stay strong………..You will be in the UK earning pounds. Even though the exchange rate to the Aussie Dollar here is now quite low (1.76), I'm sure you could scratch together the GBP100 or so each fortnight to pay the mortgage and thus hold on to the property.
How much would you kick yourself if you sold before the area went up? Normally an area stays flat for two years, then has growth of three years, and repeat.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
By the way, if the property happens to make a loss while you away, ask your accountant if you can carry the loss forward and get a tax refund in subsequent years when you return. Hopefully a non-cash loss can be declared – do you have a depreciation schedule? If it is a newish place, you absolutely want one. A surveyor can produce it for you. It's worth thousands in deductions for the first few years (?10)
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
hi all and thanks for your thoughts!!
the loan is a 5 year fixed loan at 7.65%. it expires in july 2012.
break costs are just under 9k for the loan.I do have a plan. Well it was to acquire one property every 18months or so but alas it has not happened so I got fed up and hence I am travelling to see the world.
I do have a tax depreciation schedule but as I am a low income earner it does not benefit me much. I also dont see myself earning big dollars so negative geared property is no good for my situation. By 2012 the property if I am lucky may become close to neutral gearing… I have to weigh up my options but no one can predict the future I guess!
I am able to hold onto it but am deliberating the opportunity cost of holding it for the next two years and if the unit grows by that much in value. I.e $1000 a month * 2 years = 24 k outlay. Will it be worth atleast 40k in equity by that time? Who knows…
IF it were a house it would give me more hope as they grow stronger in the area as I was told. Also I could renovate, add a room, subdivide or build a new house. With the villa style i can only renovate and its already renovated so no other equity building avenues.
Also Postcodes 2768, 2763 have been flat I believe due to the immense amount of new house and land flooding the area between Parklea and Rouse Hill!! My parents bought in Parklea for 365k in 2001. Their house is now valued at 460k. I believe that is pathetic capital growth so am scared that the investment will grow at snails pace…
Thanks once again for your input. I am taking everything into consideration and do not want to sell in a rush out of frustration and like you say kick myself if i find out it has built some value by 2012.
If you sell, to get back on the property ladder again, you will have to pay stamp duty. What a waste of money. You will also have to find a bigger deposit, because property values will have gone up. And there are the selling costs also (you have to pay the real estate agent and the solicitor).
Let's say you do sell. While you are off the property ladder, your cash will be depreciating (because cost of living, property etc goes up at a higher rate than your bank account interest rate). So after say 2 years, your cash buys a smaller portion of a property than you had to begin with.
If it were me, I'd hang on to it. Especially since it is almost cash neutral! Consider it to be your superannuation fund. It'd be irresponsible to be flippant with it.
Property investment pays dividends over the long term. It's time in the market that counts, not timing.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
sounds like a hold property to me we did just have a GFC so in another 3yrs you most liklely get better growth you should hold most properties for 5yrs to see any good results…..
You must be logged in to reply to this topic. If you don't have an account, you can register here.
