Hi all,
I Have a little dilema that you might help me with. My PI in Victoria has, like most over the last 12 months increased in value. Added to the boom, the council has just re-assesed my house for a fairly large amount. From ?52 000 too $110 000. This of course has caused my rates to go up aswell.
This house has always been cashflow positive for a min of $1500 a year. Now the rates have gone up my bottom doller has dropped considerably.
The house is still cashflow positive (just). I don’t really want to sell but I would like to improve my bottom line.
Do I:
1. Just increase the rent? (Has not risen for a couple of years)2. Leave things as they are? (Be happy with current positive cashflow and capital gain)
3. Draw on some equity and increase value of property to justify rent increase?
4. Sell up and re-invest in something else?
5. Other? (Give me your ideas)
I am looking at investing in other properties soon and by drawing on the equity from PI no1 for the deposits will potentially cause this house to be negative.
You will always miss 100% of the shots you don’t take!
I would take my capital gain and run. I dont like rural and regional properties which is what this appears to be. It will be a long time before this property grows.
Even Westan has sold up from Victoria.
Well I sort of agree but this house is not exactly rural as it is in the largest population center in East Gippsland. RAAF base Nearby ect ect. Were talking about SALE in Victoria.
Hope that helps
You will always miss 100% of the shots you don’t take!
Hi,
I would sell up if I was you and use the profit from capital gains as a deposit for 2 investment properties. Multiplication by division!Regards,
TrishBut I can still buy more properties just using the equity without having to sell. And still keep getting rent. Just not as much
You will always miss 100% of the shots you don’t take!
Hi Ronulas.
sound like you answered your own question ie you don’t really want or need to sell.
Being in SA I don’t know anything about Sale but it sounds like you are in a good area.
Rents here rise annually, so why not speak to your Property Manager about raising the rent. That sounds feasible if it hasn’t gone up in 2 years and will improve your cashflow.As for adding improvements, we have only been landlords for 12 months, and initially wanted to do lots of improvements to our properties, but now have decided if tennants are happy with things the way they are we would leave them as is. All are in good condition with good appliances etc.
Hope this is food for thought as each situation is individual.
Regards, Diane
Hi Ronulas,
I certainly wouldn’t sell unless you have a much better use of the money (in investment terms)
It seems to me you have made a sizable capital gain and the ‘cost’ of this profit is a reduction in the cashflow. So what – the property is still paying for itself and if, as you suggest, it continues to grow everything is good – isn’t it?
It seems to me that the better option is to do a rent review. If your PM isn’t talking or hasn’t talked to you about this side of your investment then they (and you) need to control your investment, rather than letting things drift along as they seem to be at the moment.
You may well find that the rental market is undersupplied and a rent increase is due. Don’t forget your costs have just gone up – increased rates, interest rates rose 0.5% ~12 months ago and so on. You are now in a business and some active management is required.
For me option 1 and then 2.
Option 3 is not relevant – the tenant shouldn’t pay for increased borrowings because you are drawing upon your increased equity. Certainly not option 4 unless the first paragraph is the case and 5 – I’ll leave to some of the more creative investors.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks all for your comments so far. If anyone else has some suggestions please feel free.
So far I’m leaning towards just increasing the rent. The tenant has been there for years and does not seem to want to move so I think he will not be too bothered.
You will always miss 100% of the shots you don’t take!
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