Hold or Sell

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Already Taken
Participant
@already-taken
Join Date: 2013
Post Count: 12
August 16, 2016 - 1:37 pm
Hi,
Looking for advice as my wife and I have differing opinions on path forward.
We purchased a 1 bedder in Henley Beach, SA in 2008 for $185k but borrowed $200k for purchase costs etc.
Conservative value today would be $230k.
Rents for $210 per week and last financial year our out of pocket was about $3,500 due mainly to a sinking fund and an additional charge to replace a balcony.
In 8 years it has been untenanted for a grand total of 4 weeks and has been a stress free entry into property investing for us.
Interested to know whether people would hold or see the limited growth as a negative and feel the money was better off invested elsewhere?
Thanks in advance.
DeanCollins
Participant
@deancollins
Join Date: 2015
Post Count: 376
August 17, 2016 - 1:12 am
Hold…..its costing you less than $3k a year for 8 years (you say $3k like last year was an anomaly)……whats not to love?
even if it cost you $3k every year for something that you put no money down on you doubled your money at $45k for less than $28k.
pascoe_82
Participant
@pascoe_82
Join Date: 2010
Post Count: 11
August 18, 2016 - 8:47 pm
SELL SELL SELL!!!
Although would be good to know more about your personal situation eg. Serviceability to buy more property, equity position, goals in Proprty etc…
But based off those numbers, me personally, I would sell.
There is an opportunity cost of holding something that’s not performing and the potential to buy something else that will perform better.
Having said that, if you can move forward and purchase more property without having to sell, and if there was any growth potential in the near future then possibly hold and use the 3500 loss per year as a tax right off.
Everyone’s situation is different though so need to know what your goals are.
Colin Rice
Participant
@fms
Join Date: 2011
Post Count: 338
August 24, 2016 - 5:42 pm
Seems sound to me and should go neutral to positive cash flow in the next few years, that is if your rent is market value with built in increments each year.
Have you had your rent reviewed recently and is it on par with similar properties in the same complex as well as nearby properties of a similar ilk?
Also consider a loan review via mortgage broker who could at the least get you on a better rate with your current lender or if feasible a refinance elsewhere.
These 2 factors could make it cash flow positive straight away and nothing wrong with holding an asset that has the potential to grow and also produces an income which is the goal for all investors, or should be!
- This reply was modified 8 years, 4 months ago by Colin Rice.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
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Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]