Creating Cash from Negative IPs

how many do you have where and which one of them has gained the most capital in the shortest time.If you can easily see which has grown the most, and you are desperate for cash, sell this one as long as its over 12 months you have owned it and pay down the others.
We have sold 2 recently and gained 163K having bought them last year in Jan and Feb respectfully.

I also need cash and am not emotional about the houses.

Good luck in your decisions

DD

Don’t sweat the small stuff,and it’s all small stuff!!

Hi Marisa,

Convert that ‘holiday home’ to a full time IP.

Derek
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Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi Marisa,

You need to decide which is more important; the money or the IP. I realise that you are emotionally attached to your IPs (I am the same) and if the potential for growth is continually increasing, then the decision becomes even more difficult. However if you need the cash, you sometimes have no choice.

Basically, it really boils down to, how desparate your need for cash is.

Best of luck,

Jo

Hi Marisa,

Oh okay…….well there are a few ways, without having to fit the whole house/unit with all the mod-cons, i.e. heating, cooling, built-in-robes, new hot water system, carpet, fresh coat of paint and so on. All of which cost money, but are tax deductible, add value and make great justification for an increase in the rent.

Check out the rental market in the area of your IP, are you charging more/less than anyone else? If so, try and think of ways to remedy this (mind you if you are charging more…..don’t go backwards, try and hold onto the tenants – especially if they are paying more for your place than similar ones in the area).

Have a sticky at http://www.realestate.com.au and look under rents to see what other homes in the area are fetching.

As I said……….I am with you, to me SELL is definitely a FOUR LETTER WORD [angry2][angry2]

Jo

Hi Marisa,

Two other options you might consider:-

1. Revalue the properties and borrow against that capitol growth that you have achieved, and
2. consider a subdivision of one of the properties and “sell off the backyard”! [cap]

Both suggestions reuire some time and effort and result in different outcome with option 1 the easier of the two.

Hope this helps, [biggrin]

DC

Marisa, I like the idea of borrowing some extra against the place, and then using that ‘borrowed’ money to cover any shortfall. One solution, not the best, but it would save your out of pocket.

In regards to increasing the rent ($10 per week won’t make much of a dent into your $4K per year!), look objectively at the house, and see if there’s any value add you can provide to the tenants, to see if they would agree to an increase in rent in exchange for – like a pergola or something. (This is assuming you are at or above market rental currently.) This should also add some capital value to your house.

Cheers
Mel

Hi Marisa,

As others have said I recommend a lengthy talk to your PM about ways you can legitimately increase your rent. A discussion with your tenant, either directly or through PM, may also reveal that ‘something extra’ the tenant would be prepared to subsidise.

I also suggest a talk to other PMs to see what they think the going rate should be – it is possible your PM is a little lax in cranking up your rent in keeping with the rest of the rental market. At the moment Perth vacancy rates are declining so there is scope for some pushing of rents – in saying that be mindful of the mid winter ‘slow changeover phenomena’.

Assuming you are prepared to invest some of your funds consider some of the following; airconditioning, fans to bedrooms, garage door, lockable storage shed, security screens and/or system (never go astray in Westminster), outdoor area, new carpet, painting, refurb kitchen or bathroom, gardening service, front fence, side fence to keep kids in, external refurb, student accommodation for students at Tuart College, and so on.

Derek
[email protected]

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Marisa,

You initially mentioned fully furnishing the place. I’ve thought of that strategy too, but the problem is when something breaks down. If you supply everything for the house, then you as the owner are responsible for replacing stuff- TV, DVD player, fridge, dryer… can you afford it? Sure, it might be good for depreciation, but how much does it cost to furnish a house? And even if you put cheap stuff- cheap furniture etc… you will attract a certain type of tenant. Sometimes, the kind of tenants who don’t have their own beds… don’t have them for a reason too. You either have to furnish for “executive” tenants (and is there the market there- for, say, business people on a 1-year contract, or at the lower end of the market. As for me- and I am a tenant- I wouldn’t want to be sleeping on a second-hand bed, so you have to think about that stuff.

Be careful not to overcapitalise in this market. Will you be able to recoup the 5-10k you spend on furniture, reno’s or whatever improvements you make?

You could always put heat bulbs in the bathroom- mmmm- yummy for tenants in winter :o)

kay henry

hi,

If you’re talking about “desperately needing funds”, spending money on furniture wont give you this.

What is your objective? If you need the $$ would you consider a joint partnership? tho this can create political hassles as well. As mentioned in the previous post, you could subdivide and sell depending on the property.

If you want to turn it into +ve geared you may need to spend some funds to grab your longer term cash. How about putting a granny flat in the backyard.

http://www.unitoday.net/financialfreedom2000