Hi,
Sadly I have a property that is negatively geared….however, through several big mistakes on my part…..ie. buying in regional victoria, buying using a line of credit for the deposit, letting it run negatively geared for several years so that what I owe on it is more than what it is worth, buying a house that has some reasonable structural problems – it is a period home etc etc.
It is in a great location – opposite a hospital in the middle of town on a corner block – so I was going to redevelop it and got planning permits for 3 units, however, now that I have done all the numbers it doesn’t add up and I think it would be very risky to move forward with this.
So – I can sell and potentially take a $15-$30k loss (depending on what it sells for)…..or I can try and save it through vendor finance.
I did the Siacci course a couple of years ago so I feel that I am moderately equipped to do this. Things I think are in my favour is that I can’t find ANY vendor finance houses for sale in Horsham where my house is……so I would have thought that was an advantage. The main problem is that I live in Melbourne – so about 4hrs away…..
So….after all of that…..does anyone have any other suggestions to save my money? Has anyone handled a vendor finance deal when they didn’t live nearby? Is there anything I haven’t thought of?
Your help and ideas would be kindly accepted!
I would have thought the hospital was an opportunity. I would look to initiate a relationship with the hospital re staffing accommodation for locums. Think of it along the lines of corporate rentals. Work your numbers on new units and what a 5-10 yr serviced apt lease deal (or rent to own deal over 5-10years) might look like for the hospital.
Regional hospitals have a high turn over in locums to fill shortfalls. They pay crazy money to locum specialists who usually command good pay and conditions. Because of their short tenures high quality accommodation adjacent to a hospital I would have thought would be of interest to them.
Food for thought. Talk to the local RE agents. They should know what you could expect to get.
Hiya
Generally speaking, a negatively geared property isn’t the end of the world providing the property grows in value.
Having said that, it sounds like this might not be the case with the particular property. If it’s costing you money to hold onto and there’s no scope for future growth than it might be worthwhile cutting your losses.
Explore long John’s idea too – it’s thinking outside the square.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Weatjess,
Firstly, the situation you are in is Negative Equity, rather than Negative Gearing. Both can happen to a property and at the same time.
My suggestion is to find a property agent who is willing to let the property by the room. So Letting is by room rather than the whole house. Good location usually means students or, like Long John suggested, nurses / doctors for the hospital. Room letting usually gives you more money, and hopefully eventually it’ll bring you out of the negative equity side.
But you need to put in some basic furniture like bed and wardrobe, some cookery, etc. Depending on your target market, you may need to strategize. For example, if it is student / single nurses / locums you buy single bed rather than double, etc.
Just my 2 cents.
Catts
Cattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
A negatively geared property is not the end of the world providing the property value grows.
kane9539 | Real Estate
http://thewatersal.com/
Email Me | Phone MeI think if you want to look at putting a vendor finance deal together you really need local people on the ground that can generate leads, and show people through. I have some people who live in Victoria and they are structuring a vendor finance deal for me in Hunter Valley and with the help of local people the house has just been sold. The deal has taken about 8-10 weeks to put together.
Great suggestion about approaching the hospital. A friend of mine approach the local real estate in Darwin and asked them what was needed. They advised there was a shortage of disabled accommodation so he bought a house within walking distance of the hospital, raised it and built in underneath as disabled accommodation. The hospital took a 5 year lease on the house with the carers living upstairs and patients living downstairs. Perfect resolution for all!
Kylie Walsh | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors who provide Tailored Property Advice and Solutions
Hi weathjess
I like the ideas here regarding the retention of this property. As a number of people have mentioned, there does seem to be an opportunity to do something with the hospital.
However if that doesn’t work out, you may get some ideas regarding a long distance ‘negative2positive’ vendor finance sale at CLICK HERE.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hello
I do not know your personal situation in relation to be able to get more credit, equity in your current property, your income etc.
A Granny Flat is always a great way to turn a Negative property into a positive.
I am in NSW. Apparently the rules and regs in VIC are some of the most strict in the country, but something definitely worth looking into. Size of land can be a consideration for approval, and some exclusions apply, eg Acreage or Heritage Listed.
Check with the local council for approvals.
A rule of thumb of what you can rent a Granny Flat for (check with your local agents for rates) is a small three bedroom house less $100 per week.
People in Sydney are renting Granny Flats from anywhere from $250 for a one bedroom and $350 and up to $750 per week for a two bedroom (depending on area).
I hope this helps
Chris Mc
The hospital idea is a good one except they will not take a house with structural problems, only a fully renovated property. Any kind of government contract will require the house to be in perfect condition.
If you go to sell it on Vendor Finance, I know that there was a fellow that need a few deals in Horsham for five years ago but have not heard of anyone else that is active there since then (which really means very little as I live on the other side of Melbourne). There is a guy who lives about 40 minutes from there who may be able to assist you on the ground.
The part about using Vendor Finance to sell the house rather than just taking a loss is that you can at least recoup your losses and probably make a small profit over time, like five years or so.
People in the country towns tend to be a little more resourceful than their city counterparts when it comes to renovating. I think this is due to the fact that in country towns everybody seems to know just about everybody and has helped somebody out along the line somewhere and owes them a favour.
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