I bought an investment property two years ago for 400k.
Current yield is about 5%.
It is worth 500k now.I want to sell this house as it has appreciated and using the 100k equity and the little bit of equity i have left in my loan, buy two apartments.
The smaller houses i want to buy in Melbourne CBD where i think has potential growth and yield is about 5% too.
Do you think this is the right move?
Your math is too simplistic to make the judgement right now.
Things that I would do if I were you.
Check with a few agents in the area, and get feedback as to what your place will sell for.
Specifically nominate in your mind what you want for it if sold now and check if it is viable with the agents in your area based on todays market.Get an estimated sale value of X to work your numbers off.
– Deduct Agent Sell Fee
– Work out Capital Gains Tax Deduct that
– Work out what you want to buy as max spend
– Work out the upfront costs of the new buy with deposits and stamp duties
– Work out how much it costs you to move house between homes.I would love it if it was as simple as Value X if Sold = Cash Y, but it rarely works that way.
I think if you calculated this scenario based on what you want to sell it at, and what you want to buy, and fill the in-betweens
The outcome of this calculation will make it an easy decision for your original question.If appreciation is the big one for you, then consider that the Melbourne CBD historically hasn't appreciated as well as the inner city ring (2-5 km from CBD) as the land content is much lower in high density than low density. There are duties savings if you buy off plan (but then you don't have to sell right now either, you can conmsdier a deposit bond) which you might see as attractive.
As PC has mentioned, the costs can be prohibitive to sell, so consider trying to release the equity by refinancing or topping up your loan.
We do have obligation free seminars along with commentary that cover these types of strategy in Melbourne that you are welcome to attend, all is on our website.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
