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Hi Guys,
I am really confused on what I should do with my current IP.
I purchased this lakefront apartment 6 and half years ago for $265,000 plus closing costs on an interest only loan.
My Loan repayments on this property are nearly $20k and an extra $3k for rates and body corp fees.
The rental return each year is $15,600. Our local estate agent believes that he can sell it for about $380k, as he has sold one in the same apartment block for that much.I am also in the process of building my PPOR and I will have a large debt of about $420k.
So I am really confused on whether I should use the equity in my IP to purchase my next investment, however not sure if the banks will lend me anymore funds. I am also not sure if it is worth keeping as it is -geared or if I should sell the IP and use the extra funds to downsize my PPOR loan and then use the equity in that to purchase my next IP.
Any advice would be greatly appreciated.
Thanks
BarbaraHi Barbara,
Tricky situation you have there. What do you think the property market outlook in your area? if you think the growth will be higher than the -ve gear then you might want to consider keeping it until market settles down. You also might be able to borrow more if you dont mind renting one or more rooms from your PPOR.
When I originally purchased the property, the agent told me that there would be high growth in the area as there were future plans for a marina to be built, however it has been 6 years and the council keeps putting off the development of the marina.
The same time last year it was valued at about $320k and has just received a growth i guess from the buying frenzy in the last year, so i am not really sure if this growth will repeat again anytime soon or if it will continue to grow as it has for most of the time I have owned it.
