would you sell a badly performing brisbane property (house on redcliffe peninsula) after 6 years and little growth ( perhaps 10-15% tops) I will take a about 40k loss after I include all holding costs over 6 years! or should I hold for a10 year cycle and hope for some growth in the next 4TheFinanceShopParticipant@thefinanceshopJoin Date: 2012Post Count: 1,271Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Are there any indications of future growth?
There's a lot of talk at the moment about the Brisbane market entering in upswing. Only time will tell whether this comes to fruition.
Is there a chance you may have simply paid too much for the property at the start?
If you think the money can be better spent elsewhere and you're reasonably confident that its a dud then liquidating might not be a bad option.
JamieGeddoMember@geddoJoin Date: 2012Post Count: 22
Aren't they extending the rail out there in the next few years?
As mentioned above, is it costing you much? If you plan to buy another property, then you have to pay stamp duty and all those fees again, so you should keep that in mind.
The Brisbane market is tough but I would hold, as I am with 3 properties. My rents cover me on 2 though, so it may be different.
Also, I think Redcliffe is a great spot and if you,ve held for 6 years, then you may as well hold for another coupleShiny_Suit_ManParticipant@shiny_suit_manJoin Date: 2012Post Count: 54
The work to the railway is just one of the many developments that has been approved for redcliffe. I'm actually watching that area at the moment as an area of interest. Once the freeway is finished being worked on it will also help with access to the city from redcliffe which could also help. I would hold, but my goals aren't as aggressive as some and i have the time to to wait it out.Daneo79Participant@daneo79Join Date: 2012Post Count: 31
Im from the west and I have heard of the works going on in redcliffe. It really depends on your situation and whether you have the capacity to hold or if the money could be better invested elsewhere.Nigel KibelParticipant@nigel-kibelJoin Date: 2005Post Count: 1,425
My view is first How close are you to the Water?
However do not be afraid to get rid of a non performing asset. You have to look at the opportunity cost, in other words if you can get rid of one property and then buy a property in inner city Brisbane that could provide far more growth over the next 10 yearsPaul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196
During periods of negative to low capital growth a lot of people have been 'taking a bath' on their residential IP's. That's not to say that capital gain won't return but we've started to chase positive cash flow a lot more these days than capital gain.
We've been doing this by converting some poorly performing IP's to positive cash flow by selling them with vendor finance. We call it our negative2positive process. Our website at http://www.negative2positive.com.au is there to promote our N2P service but it's got some good free information there, to get an idea of what it's all about.
Cheers, PaulNigel Kibel wrote:
However do not be afraid to get rid of a non performing asset. You have to look at the opportunity cost,
Entry + Hold + Exit + Hold for 4 more years. My guess is you're looking around the $100k mark. Now work out at what rate a property would have to appreciate at to get you to break even. In a best case scenario you could be looking at another 5 years. Total is now in the 15 year time frame and all you've achieved is a property that has in the main held its inflation adjusted value.
If it where to rise then were are the drivers for growth in property values in that area. Discount infrastructure. It never seems to get built in ones lifetime especially by broke state governments.
I see nothing on the horizon (or for that matter the next 5 – 8 years at least) anything that could potentially lift the economic dynamic for the Brisbane region. There will be exceptions as some suburbs get a lift for obscure reasons but picking them with any amount of certainty will be near impossible. The roulette table would have better odds.simpleParticipant@simpleJoin Date: 2006Post Count: 237
Like in above post, crunch the numbers and see what comes out. My approach would be to see if I can improve cashflow. Another one is to dump some cash in to the loan (assuming P+I loan) to place you on the brake-even point. From there onwards it will just keep on improving.
I do not see Redcliff booming anytime soon. Anyone with money is looking at Brisbane, close to CBD. That with remote location drives investor away from already lean market.
Looking at the maps, Brisbane have some decades of growth until it will start to pressure Redcliff prices upwards by crossing the boundary. By itself, it will not go up. Not enough people and industry.
thanks Nigel…. yes in hindsight i will always take inner city over fringe… i do have an IP in inner brisbane..a. woolloongabba house,,, its performing better than scaborugh, but I have had it longer (2004) as its good performance was in the first 4 to 5 years, since then its been up and down so pretty flat since 2008….i am considering flicking both properties and increasing my holdings in Sydneys inner west, where i live. seems to be an ongoing rock solid market. The average vacancy rates in brisbane is perhaps quite telling of the current market.. this would need to tighten considerably for rents to increase and investors and then homeowners to come back in… just me two cents.. maybe in the pipeline ? who knows…obviously i would be happier if i can hold with some optimism
given i borrowed 110% , holding costs (after tax return) is about 7 to 8k per year depending on rates, bills. I do however have a LOC paying the interest on all IP loans so effectively turning my non deductable home loan debt into deductable debt by "keeping" all the rent rather than using it to pay the holding costs. So obviously the negative gearing is increasing with this set up, not decreasing.BigCubezParticipant@bigcubezJoin Date: 2012Post Count: 48
I've read that Redcliffe is tipped as a strong growth area over the coming years. Especially if your home is close to the water. I believe it is seen as an undervalued suburb at present. If you can afford to hold it for a couple more years then hopefully these predictions are correct. If it's performing badly look at your options, can you add value and increase rent by renovating?
CubezBigCubez wrote:I've read that Redcliffe is tipped as a strong growth area over the coming years. Especially if your home is close to the water. I believe it is seen as an undervalued suburb at present.
QLD has a rising unemployment rate (6.2%) and is only topped by TAS at 7%. QLD is loosing jobs at the rate of 65/day. The Qld govt is broke and shedding public sector jobs in an attempt to get their budget under control, coal is still shedding jobs and is struggling to remain competitive globally, gas is running into a brick wall put up by conservationists and farmers.
Newman govt claims it will be back in the black in 2 years and will try to recover its AAA rating. I don't see any big infrastructure spends in the near future (if at all). It looks like Qlds pop growth is slowing as well. Its early days yet but this study shows some interesting trends for different age groupsJpcashflowParticipant@jpcashflowJoin Date: 2007Post Count: 575
Is the QLD market going up or down, every one is going to have a different opinion and that what makes investing interesting.
I think what might matter the most is how is this property contributing to your overall goal?
Nigel raised a good point as well, opportunity cost? Some times a under performing asset may cost you more based on missing opportunities vs holding the property for a gain.
Have you spoke to your accountant? If you sold for a loss, can you claim a capital loss to offset any future capital gain?
The biggest fear people have in investing is making a loss, sure you might make a loss now, but the experiences you have learnt will make you more money in the future.
I know people have suggested that "new roads", "works" "etc" might occur, But ask your self this question, if non of these planned "works" occur what will happen to your property then?
Maybe call the council and see what stage they are up to in regards to new roads and works "etc". Do some further researh.BigCubezParticipant@bigcubezJoin Date: 2012Post Count: 48
Peter Koulizos and Cameron Kusher of RP Data both picked Redcliffe as an area poised for strong growth over the next years due to its affordability and attractive lifestyle.
Located approximately 30km north of Brisbane City and sits on a waterfront peninsula, it is relatively affordable compared to suburbs situated an equivalent distance from the CBD but located away from the ocean.
Redcliffe features lots of restaurants and shops situated both within the suburb and in neighbouring suburbs.
“Many houses in Redcliffe have substantial renovation potential which is a great way to add to the capital value of the property,” says Kusher.
Koulizos says Redcliffe remains one of the cheapest waterside suburbs in Queensland that’s why it’s currently targeted by developers.
“There’s a lot of construction near the waterfront. The Queensland state government has also designated Redcliffe as a major activity centre which will see facilities and infrastructures upgraded. The construction of another bridge means that it’s now easier to get to Redcliffe and will dramatically reduce travelling time to and from Brisbane,” he says.
Where to buy
As close to the beach as possible around the southern end because it’s been rejuvenated by the council
Average annual growth over past 5 years:
Forecast over the next 3-5 years: 50% growth* because it’s coming from a very low base.
Freckle, I agree about the Qld govt, however I believe they have already shed most of the public sector jobs that they had planned to. And I totally disagree with no big infrastructure spends (although most will come from the private sector). ie. Gold coast light rail, Rail line from mines in Alpha to Abbott Point. And I'm not worried too much about coal. I work in the industry despite media hype I can see it still growing over the coming years.
Interesting. I suspect the hotspotters and industry commentators actually facilitate growth in these 'left behind suburbs' simply because the primary drivers of suburb resurgence are investors following popularised opinion. This offers investors a way to look at and analyse such burbs given there are many precedents. For example you would only need to look at this suburb and measure the likely lower value versus comparative value difference to see where the potential might be. This kind of analysis should enable a high vs low probability. You can then figure out what the growth (if any) curve over time might look like.
Once you had a model you would need to actually do some serious DD to confirm model outcomes.
Tax losses. From ATO…
Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
- Individuals, both those in business (sole traders and partners) and those not in business, can generally carry forward a tax loss indefinitely, but must utilise a tax loss at the first opportunity. Individuals may have to treat losses from non-business activities (such as investments) and business activities separately.
I'd be slightly cautious about hedging my bets on a suburb due to proximity to water, if this is not accompanied by sufficient employment to bring more people to the area, and increased wages to enable driving up of the property prices. Just a thought.simpleParticipant@simpleJoin Date: 2006Post Count: 237
Agree with JacM.
Wynnum in Brisbane have more potential than Redcliff in this respect. It's on the water, plenty of infrastructure for Brisbane Port going up and you got JOBs.
That article on Redcliff makes me think of Gold Cost. Not enough industry to support population wages growth, so weak RE.