hi all
yes mike at 24 k its making a killing. but not at 95k.
my strategy is buy and hold but sometimes its good to take a profit. i’m reinvesting the profits into new purchases that are averaging 40k and renting for 120pw. so by selling i’m getting rid of one property and buying 4. yes i could refinance but i am happy to be out of this area. the tenants aren’t the best and the land moves a bit much so i could be up for some big bills in a few years.
regards westanIf there’s a good reason for selling like you’ve suggested ( I know I wouldn’t want to walk around that area of town at night [
]), then that’s fair enough.Just going by numbers though…
refinance to realise your $70K gain –
sticking to 80% LVR, giving you $56K to play with, or $14K for each of your four new purchase s which should more than cover 20% deposit + purchase costs if the average is $40K per house – probably have about 10-15K total left over to spend on improvements to increase the rentability too.Assuming you can get $120p/w for each of them, you’re looking at 15.6% yield ((480*52) / 160000 ) if you sell the property,
or 17.1% ((605*52) / 184000 ) if you keep and refinance.Don’t forget about CGT if you sell too. Top tax bracket? 94 – 24 = 70 * 0.485 = 33.95 / 2 (assuming you’ve owned over a year)
= 16.97 . Have you claimed depreciation? CGT will be even higher!So really 94K – 17K CGT – 2K selling costs???
= 75K .. Not really that much more than the equity from a refinance deal, but you lose $125pw income.Given this, there would have to be a really good reason for me to sell the property. Numbers dont mean crap if you’ve got tenants the like to use the floor boards as firewood though [
]Cheers,
Mike.
]), then that’s fair enough.
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