My wife and I have a rental property in Moranbah and are toying with the idea of selling and re-investing in other places. It used to be our primary residence, so after speaking with our accountant, have realised we can sell it capital gains tax free. We have employer supplied accommodation here in Moranbah now, so don’t need the house anymore. Its a big block so we have looked into subdividing and putting some duplexes on the land, but now realise that this will put us into capital gains tax territory if we sell later… We had a builder do the drawings and quote for this scenario, but to be honest, its a bit scary going into that much debt at the moment, regardless of the income the duplexes will make…
Walk away now with a good bit of cash to invest elsewhere, or go into more debt and build?… Any good ideas???Dan Cody
[email protected]I'd suggest walking away now to invest elsewhere, but that's my personal opinion
There are no signs that the mining areas will drop in value. I think it is a matter of reviewing your investment. It also depends on the amount of debt vs equity you have. You could borrow against the property. It really depends on what you have in mind.
Nigel Kibel | Property Know How
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Hi dancody,
I’d have to agree with Nigel here. There are a number of financial considerations to take into account when deciding what to do with a property. I’m also tend to agree with Nigel that many mining areas will see significant gains in the coming years depending on there location and fundamentals.
I don’t have property in Moranbah but do have property in the Bowen Basin in another location and intend to add to and strengthen my portfolio with more.
The amount of future investment in the immediate area surrounding Moranbah is massive and if you’re already in the market it may be prudent to not sell. Rents and values have risen significantly in Moranbah recently. I think the only threat may be 100% FIFO so keep your finger on the pulse with this one.
Jack
Hi Dan,
Based on limited information it would appear as if your underlying concern relates to debt.
Debt, when managed carefully and used judiciously, can be your greatest ally. If you go back to the time when you bought your Moranbah home I bet the level of debt wasn't insignifciant for the time. No doubt you had a few nervous sleepless nights coming to grips with yoru debt level.
I suspect your 'old home' is pretty much paying for itself. If this is the case I see no need to sell down & re-investing at this stage. I wouldn't be adverse to adding other investments to your portfolio – just need to select somethign thta suits your financial situation, goals and long term outlook.
At the very least get a DA approval, will add at least $200k to the value when you sell. Then decide whether to actually do the development or not. Build costs are expensive (allow $2000 per sqm turnkey), but the upside for the sale value and rental yield would be great.
Your bank of information that you spread here is really interesting. Thanks for sharing such a great post.
I should add that you want to make sure that you maximise the investment yield for the cost involved. You need to be very efficient with space, given the high build cost, either for you or for the eventual purchaser.
I’d be happy to critique the designs your builder has provided if you wish. Just send me a private message.
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