All Topics / Help Needed! / what would you do in our shoes

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of persuasionxpersuasionx
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    @persuasionx
    Join Date: 2004
    Post Count: 9

    Hi we own four investment properties all cf+. 2 in Mt Isa, 1 in townsville (commercail) 1 in Kalgoorlie. we are at a stand still as we have used all equity available to move forward. Thinking of selling two of our properties in Mt Isa as prices are at record highs with the sale we would have approx 140-150000 cash after settlement and capital gains. Here is the question do we invest in more property thinking south east qld (negative geared) or go commercial property or just sit on the money. Maybe managed funds until more cf+ properties arise. Just looking for some thoughts really.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    what are you thoughts on capital gains over the enxt years years? If you think there will be none, then maybe you are better off investing elsewhere and waiting a bit before getting back into property.

    Terryw
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    Profile photo of troy1888troy1888
    Member
    @troy1888
    Join Date: 2005
    Post Count: 4

    Hi Persuasionx,

    A question i would ask myself is do i need to sell to invest in commercial r/e or managed funds ect. Everyone’s situation is different but is using your equity an option? that way you can still benefit from any future capital gain, and if they are cf+ i would be reluctant to sell them for property that is negative cf.

    All the best.

    Profile photo of Adrian CahillAdrian Cahill
    Participant
    @adriannqld
    Join Date: 2003
    Post Count: 128

    Im in a similar boat. I have 3 properties, A, B & C. I have a spare 60k equity in A and 70k in B. I want more investments but running low on spare cash flow to fund any negative geared property. and +CF opportunities are running low.

    I have decided not to sell, i believe NQ, and Isa still have a fair bit more growth to do as our region becomes more well known to investors and the area continues to boom in numerous different sectors(defence, mining, refining, etc).
    I am considering using the equity of property A to buy into managed funds and get a margin loan on top. (considering international property)
    and doing the obvious and use property B equity to buy another property as close to +CF as possible near Tsv.
    ps. how did you get started in commercial property in Tsv

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    Profile photo of DazzlingDazzling
    Member
    @dazzling
    Join Date: 2005
    Post Count: 1,150

    G’day persuasionx,

    You haven’t given a great deal about your situation, so the answer is going to be as weak as the input data it relies upon.

    But anyhooo….

    It appears you have a primary decision to make….sell or not sell.

    Subsequent to that, if the primary decision is to sell, you have three secondary choices.

    Frankly, I don’t like the sound of any of the three choices.

    1. Negatively geared SEQ is something I know nothing about, so I’d give it a wide berth.
    2. Commercial property with the funds you have to play with is risky at best. You simply don’t have enough money to purchase a decent CIP with decent tenants.
    3. The third choice of just sitting on the money doesn’t appeal either.

    So, given that, I’d revisit your primary decision point….whether or not to sell.

    Once selling costs, CGT, purchase costs to jump into something are taken into account, these all constitute a big kick in the pants backwards on the road to wealth.

    What data supports your theory that the cap gains are totally spent ?? I was under the impression the commodity prices of what they are digging up in the Isa are going OK.

    In terms of record prices, that’s what they were saying about Sydney prices in 1960 when houses were selling for 4,200 pounds. Way too high they said….ridiculously high, record levels, you’d be mad to buy when prices were that high.

    Good luck with whatever you choose.

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    Hi. Good on you….you’ve done well. The popular thought is to never sell property….keep borrowing against it or pay it off….although if you view it as a ‘vehicle’ or means to an end, residential property is for you to make money on and use to suit your lifestyle……so why not sell if you need some cash, and it frees up a bit for another couple of houses and maybe some time off work? Decisions decisions. Looking at your walk away figure after costs and CGT, had you thought of perhaps hedging your bets, and selling just One of the Isa properties? Could be a good option eh? I always remember one investor making the comment that realestate gains are all theoretical (ie profits are unrealised) until you sell….All the best with what you decide. [thumbsupanim]

    Profile photo of tony wpbtony wpb
    Member
    @tony-wpb
    Join Date: 2005
    Post Count: 88

    hi persuasionx,

    what did you invest for when you started?

    Was it cashflow or capital ?Judging by where you have invested , i would assume cashflow, this will not happen agian within the next 5 years , if you want the capital , i suggest you cash in whilst you can

    cheers

    tony

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    Profile photo of crushercrusher
    Participant
    @crusher
    Join Date: 2002
    Post Count: 186

    You are heavily leveraged towards mining towns, so I would cash in on the Isa properties and use the cash as a deposit on a SEQ property. You will lose some cash in capital gains TAX but you could consider offsetting this by prepaying your loan interest on your Kalgoorlie and/or Townsville properties before 30 June next year (if lender allows prepay). See your accountant about this. I had to do a similar thing when my savings and serviceabilty were low and it helped me to be able to continue investing later. It’s good to sell when you don’t feel under pressure too. You can afford to wait longer to get top dollar.

    If you do sell, I suggest keeping a bit of ‘easy to reach’ cash as a safety buffer. Bankwest have an ‘at call’ type internet banking account that is offering a special 6.4% interest rate for the first 12 months.

    If you want to find another property that has some good capital growth prospects then check out the latest Residex country predicted growth report for ideas.

    Todd Burns
    http://www.freepropertyhelp.com.au

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