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  • Profile photo of HarryMarcusHarryMarcus
    Participant
    @harrymarcus
    Join Date: 2012
    Post Count: 16

    Hi everyone,

    I hope you’ve all been well.

    I’m contemplating selling my 2BDR PPoR and I’m keen to know whether there’s merit in my logic. I’ll try to outline it as briefly as possible.

    – My strata fees are on the rise (1.1k) and I envisage this growing to 1.3k within the next 12 months;
    – properties in the area are selling for over inflated prices (in my opinion)
    – I am keen to take advantage of the over inflated pricing and the fact the high strata won’t deter anyone in the current climate.

    Moreover, I’ve calculated that in the short term the net equity return of 200k will result in +700 per month surplus, +1k in the difference between renting and servicing the mortgage. Alternately I could put the 200k against an IP offset account, but probably not wise as it will reduce taxable interest.

    The alternate view was potentially turning the PPoR into an IP, but then I assume that would be inefficient as the loan is sitting at 50% of property value?

    Keen to get your views as always… I’m really looking forward to them!

    Harry (Western Sydney)

    Profile photo of Tony FlemingTony Fleming
    Participant
    @the-dark-knight
    Join Date: 2008
    Post Count: 396

    Hi harry you could always rent a room if its not being used. is it Sydney metro or Outer suburbs?

    Tony Fleming | Triumphant Property Group
    http://www.triumphantpropertygroup.com.au
    Email Me | Phone Me

    NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury

    Profile photo of HarryMarcusHarryMarcus
    Participant
    @harrymarcus
    Join Date: 2012
    Post Count: 16

    Thanks for that Dark Night – it's in North Parramatta.

    I guess the goal isn't the short term maximisation of cash flow (i.e. what renting another room would achieve) but maximising the opportunity against the current demand context and in the process and offloading a potentially difficult property to sell when strata goes up and the property market cools.

    It's a tough call I know, but I figure there may be an angle to this that is not yet apparent to me.

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Strata fees aren't high for Sydney.  

    I think prices in Sydney are still moving and if interest rates stay low, better still.

    Why is it difficult to offload? That may make the difference. Also it's winter if things are hot now, wait until late spring. Anything could happen.

    The thing you need to decide is what you'll do with the money. If there's a better option, go for it. But do not sell and not buy in this market as you may miss the ride.

    If not sit tight and ride the wave.

    Profile photo of Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269

    Hi Harry, 

    It depends what you want to achieve from property in the long term. However if a property sits in a good market and your research leads you to suggest that the market in the future wont be as good as now than yes you should definitely take advantage of it. 

    My question to you would be what have you done to research and come to an educated conclusion on the future of the local property market?

    as for the BC fees I dont think they are high or that the increase will deter buyers in the future. I am assuming you mean they will go to $1300 per annum. A $200 per year jump correct? For the next buyer that is only an increase of $2000 for a ten year hold.

    Do you have other investment properties? you are better to be exposed to the property market somewhere than not at all i suggest.

    Josh

    Profile photo of HarryMarcusHarryMarcus
    Participant
    @harrymarcus
    Join Date: 2012
    Post Count: 16

    Thanks for the insightful responses guys.

    I should have clarified, but the $1.1k strata is actually per quarter (not annual). I have my other investment property two streets away with strata under $400 pq.

    I guess the bottom-line is:

    • High strata fees being a deterrent to future buyers in a softer market
    • A couple of "ageing" issues around the building which make me feel uncomfortable (i.e. mould appearing in the top floor units that doesn't effect me)
    • I suspect cost of living will > considerably with consumer goods being impacted by the continued decline of the AUD. Not sure many people are considering this just yet

    I guess the two questions that also arise are:

    • Is there any financial merit behind selling and buying in the same market? (i.e. releasing the equity I have in the property?).
    • When is peak sales period throughout the year?

    Appreciate the feedback guys, I know they aren't clear cut questions.

    Harry

    Profile photo of Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269

    Ok, that is expensive then!

    Considering it is your PPR than your tax advantages are great! paying less interest is not necessarily a bad thing should you only have IP's to offset. You could further invest with a good strategy or look at buying a new PPR. 

    Mould is an issue that sometimes never goes away (permanently anyway). Not that its a reason to sell a house, but it looks like you could be doing better things perhaps?

    Josh

    Profile photo of Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269

    Also, sales are a little subdued at present which is also while vendors wait for election issues to be over. however i don't think this will have a great impact on property markets, its just human behavior to not make decisions around times of uncertainty. At the moment the uncertainty is political.

    However each local market needs to be assessed on its own, if yours is good now maybe its time!

    Profile photo of HarryMarcusHarryMarcus
    Participant
    @harrymarcus
    Join Date: 2012
    Post Count: 16

    Thanks Josh – your help most certainly has helped establish a conclusion.

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    What is the breakup of the strata fees? If the sinking fund is high then this may be to pay for upcoming property issues being identified. If this is the case they should go back down again after sufficient funds are saved to do the works.

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