Forums / Property Investing / Help Needed! / Need to understand, what should i do?

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  • Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    Hi All.

    I purchased a house 10 years ago as a PPOR, then after 4 years turned it into an IP.
    Purchased 10 years ago for 245K, Borrowed 205K
    If sold today it would sell for about 310K.

    Interest Only loan, No principle has been paid off.

    I have paid about 95K interest over the 10 years.

    Current rent $320 a week.

    The current suburb has an annual growth of 1.1% pa

    What should I do with this? How long should a property stay negative geared for?

    Should i sell it or just let it sit as it does not affect me in any way?

    thanks all and appreciate any advice given.

    Craig

    Profile photo of Kinnon BellKinnon Bell
    Participant
    @kinnon
    Join Date: 2014
    Post Count: 151

    Is there a reason why there’s not been much CG in the past? Is there or will there be anything happening in that suburb to help with future capital growth? Any infrastructure investments or developments?

    Kinnon Bell | Kinetic Funding
    http://www.kineticfunding.com.au
    Email Me | Phone Me

    Mortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.

    Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    I bought the property at the tail end of a property boom in the area, also the house was in an older area as at the time, just around the corner a brand new estate was being established.

    This older area has a slower CG than the newer area

    There is good infrastructure around, train station, buses, schools, sporting fields, shopping. Easy access to freeway & 25 min drive to a city in NSW. Not Sydney

    Profile photo of Jess PeletierJess Peletier
    Participant
    @jaylou
    Join Date: 2009
    Post Count: 12

    Is it actually negative geared?

    If you have reason to assume better capital growth in the future, you could hang onto it and either access some of the equity to put toward something else, or just hang onto it and let it do its thing.

    If rates went up and it did become negative, would you still be happy holding it? Will it need any major work in the next few years?

    I like to go through a few scenarios when deciding whether to hold or sell, b/c what seems right now might not seem so right in a different interest rate environment, or in a few years when the plumbing needs replacing etc.

    Jess Peletier | Seed Financial
    http://www.seedfinancial.com.au/
    Email Me | Phone Me

    Mortgage Broker - Perth and Australia wide

    Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    Last tax return it went as a loss, (just) this year may be different. I think I have paid a bit more interest than 95K actually. I have a large chunk in an offset. But this will soon be going towards buying our PPOR

    I don’t know if I would be happy holding it. I get all different pieces of advice and it just puts me in a spin.

    How long will this take for me to make a return better than a term deposit?

    We want to buy a house, maybe should sell this and put toward our PPOR, grrrrr anyway…..

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    If you sold yo would have around $100k cash. Using this on a PPOR will save you around $5000 pa in interest each year for the next 20-30 years. You might then be able to borrow to invest and get something with better capital growth prospects.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    I agree with Terry.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

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