dangermouse99Participant@dangermouse99Join Date: 2004Post Count: 88
Should I sell or Hold.
I have a former PPOR that is now a IP (Townhouse) that I have held for approx 10 years on the Contral Coast of NSW, i currently live in Melb and have kept it in case i ever wanted to move back to the area even though it has a poor performing property. I bought unfortunately in the last boom and finally now have just gone through another boom and now have had some cap. growth, its negative geared and owes me about $290K and im getting about $305 in rent and could sell it for bout $420K. Do I cash in and sell and possibly buy in the same area after a market correction again or do I just use the equity as im in negotiations to buy my 4th IP. I understand some of the pros and cons in doing both strategies, but thought id ask more season investors what they would do in my situation as that could lean me to doing one strategy over the other. My main investment startegy is to keep acquiring + IPs to eventually replace my income in about 10 years. I know its a personal decision as there is particularly no right or wrong answer, but I do listen to peoples thoughts and then make a decision based on what I have in front of me as im really undecided and dont have any life or other factors that lean me one way or the other.
Cheers & thanks
DMBennyModerator@bennyJoin Date: 2002Post Count: 1,376
The numbers would give you a clue. Have you calculated the dollars available after all costs?
First, is this “old PPOR” still your nominated PPOR? Or will you be up for CGTax on sale? CGT could be a MAJOR cost to you – is it?
Re “should you sell”, that will depend on
1. what it is costing you to hold,
2. whether having an IP so far from home is any kind of issue, or not,
3. the opportunity cost of holding on
4. the projected growth of this place into the next decade….
You might have a “screaming buy” elsewhere and could really do with selling. Lots to consider – good luck with it.
Bennydangermouse99Participant@dangermouse99Join Date: 2004Post Count: 88
Yeah sort of, I just use 5% as a general rule when it comes to costs, so approx $20K as a rough rule, so really only a small profit, yes some CGT as I belive its classed as a IP rather than IP, not 100% sure of the rules there as its been 10 years since I lived in it.
1. It is cotsing me a samm amount to hold
2. I visit home regualry and have a great managing agent, so no worries
3. Not to much opp cost as I can tell
4. The growth has been great teh last 12 months but not sure it has too much to go and the will flaten and stablise i would imagibe, hence why i thought of selling in such a hot market.Little_StoneParticipant@little_stoneJoin Date: 2014Post Count: 17
Looking at it from here, it has $46,000 of use-able equity in it. ($420,000 x 0.8 minus the debt = $46,000). Have you looked into the other use-able equity in your other 3 IP’s..?
Your repayments would go up ofcourse on the mortgage but with your managing agent, is rent going up in price relevant to the growth in the area? This may assist in curbing the difference in negative gearing.
Thirdly, have you researched other areas to invest in for your next IP. Central Coast is a lovely place to live but not high on the investment list of “where to buy” so if you did sell it, the proceeds should be about getting towards that 10 year goal as apposed to buying for later life PPOR.Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010
Hi Dangermouse9, Looking at it from here, it has $46,000 of use-able equity in it. ($420,000 x 0.8 minus the debt = $46,000).
In most cases you can actually go to 90% than 80% on equity accesses, ie $88,000 available with the right structuring. :)