So when do you say enough is enough? The property reached its peak when it was acquired. It has moved up since then but has settled back down to the original purchase cost. The rent is paying for the property, so costs are minimal, but are stagnant as well and not increasing. The property schedule is slowly shrinking, but maintenance costs are starting to catch up. Do you wait for the supply to reduce and prices to improve while watching others states rocket up? Or do you cut and run as it would seem some others have decided to do?
Hi Goosehead,
So much depends on answers to a few more questions :-If your property is in Melbourne or Sydney and it HASN’T grown, I’d be asking serious questions re “Why not?” This could indicate it is time to part company. But if your property is elsewhere, then “It depends…..”
I am seeing early signs of price rises in Brisbane, and other areas may be yet to move. So where is your place? And just what do you mean by “The property schedule is slowly shrinking…” as I am struggling to understand this.
Add a bit more pertinent info re your property, and let’s see if more answers can come your way,
Benny
Over what timeframe are you talking? Where is the property located and when did you buy it? It may be due for an increase.
Lots of people make the mistake of thinking their property is going nowhere, only to sell and see it skyrocket a year later.The property was purchased in 2007 in Morayfield, just north of Brisbane. It may be due for an increase, just waiting to see if the supply and new houses dry up. Until then I don’t think it will move.
Benny, what I mean is the advantage of a rental schedule is reducing as I used the diminishing value method. I was planning on capital growth and being able to sell around this time to pay off my PPOR. This meant using the diminishing value method for the initial advantages. Obviously with the lack of capital growth this plan is turning to a disadvantage.
As a side not I have talked to other property owners that have fallen into the same situation. That being they have not bought in Sydney/Melbourne, have not had capital growth, and have had a flood of houses onto the market. I wonder how many people are in that situation?
Jas
Hi Jas,
Ah, a depreciation schedule – yes it all makes sense now.Re growth in Morayfield, I don’t know the area well, but I note there is stacks of land around, and there seems to have been quite a “push” in that area over the last number of years. That could have affected the supply/demand curve of course. Is it still growing? Are new homes selling for more than those from 2 years back? Are there any signs of infrastructure spending that will add value to the place? Any new employers that will need more workers?
We have been through quite a long downturn (GFC would have played some part there) – any upturn rests with that supply/demand curve. And that will differ with each market. If you were to sell in Morayfield, would it realise an amount that would allow you to make your next move? Do you have another market in mind? With Brisbane showing signs of an uplift, Morayfield could be another year or two down the track for any increase – unless there are other drivers for its growth.
It’s crystal ball stuff in many ways, but after a 6 year downturn things may be turning the corner. Let’s see what others have to say about Morayfield,
Benny
Wouldn’t be buying in Morayfield in a month of Sundays.
Depending on your budget i can think of a 101 areas i would invest in Brisbane even if means buying a Unit in a inner city suburb.
Whilst most of my properties are in Brissie we are starting to buy interstate in larger regional towns as certainly seeing opportunity.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
There has been some growth recently, not that it is anything to jump about. Some of the spending has been done, or has been sideline for the short term.
Hey Richard, that advice would have been good in 2007 lol. What can you do but learn.
Hi Richard,
Would you expand a little on this please :-Wouldn’t be buying in Morayfield in a month of Sundays.
Care to share?
Benny
Hi Richard,
What time frame are you looking at with the reference?Jas
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