Forums / Property Investing / Creative Investing / How to know which property to sell??

2019 Cash To The Max Workshops - Positive Cashflow and Capital Growth
Viewing 5 posts - 1 through 5 (of 5 total)
  • Profile photo of JohnJohn
    Participant
    @neron85live-com
    Join Date: 2017
    Post Count: 2

    Hey there
    I’m currently developing on a site which is going to be more profitable and quicker return than my existing investments.
    I want to purchase another property in the mean time,
    So that once this project finishes, a new project can roll over and start with minimal time lost.

    The position I’m at in the moment is, i cant get approved for any more loans,
    I cant make more money and cant save more money.
    Only option I have is to sell one of my investment properties and re-invest the profit into a better more profitable investment that i can develop on.

    I have 2 investment properties of which i can sell,
    both are good investments and I’ve always had a buy and hold strategy,
    until reading Steve book 0-130 Properties.
    Both properties have there pros and cons

    Frankston property, purchased on 2007
    I believe can currently sell at 550k
    purchased at 237k and is rented for 350pw

    Coburg property, purchased in 2009
    i believe can sell for 630k,
    purchased at 385k and rented at 380pw

    Both IO rates are at 4.87
    Using Steves 1 percent rule,
    Frankston 7.68
    Coburg 5.13

    Do you sell the better performing property or the lesser performing property

    Franskton is a complete house, and was purchased 2 years earlier
    Coburg is a townhouse, and has a really good postcode compared to frankston

    Also, what is there to know about selling a house that the agents wont tell you?
    What is there to know that nobody tells you until you’ve sold

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,325

    Hi John,
    I’ll have a guess and say sell the Frankston one. Why? Well, from the numbers shown, it has the larger Gross Profit if sold, thus likely the largest Nett Profit after Sale. Sure, it will cost a bit more in CGT (or a Tax on Profits) but it should leave you with the larger amount to parlay into the next Ip.

    That also leaves you holding the “better postcode” IP which cant be bad…. Let’s see whether others agree or not… ;)

    Benny

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Some more things to consider:
    . Which will result in the greater amount of cash released?
    . Which will result in the least amount of cgt?
    . Any land tax differences?
    . both owned by same persons?
    . What loans are they securing?
    . Could you keep one of the loans open and substitute securities?
    . Instead of selling could you borrow somehow? Another party involvement etc.

    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 JohnJohn
    Participant
    @neron85live-com
    Join Date: 2017
    Post Count: 2

    Hi Terry, hey benny
    Thank you for your reply
    -Frankston will result is a grater cash release
    -Frankston will pay higher cgt
    -both are owned by myself under my name
    -loans are not secured against anything

    -my broker is looking at arranging a low doc loan for me but either way,
    id want to sell one so i have more funds to buy a better property to develop

    I’m just thinking with the figures (not location)
    frankston is positive gearing at 380pw and has had better growth that Coburg
    Where Coburgs rent has been the same for 7-8 years because the area has been building for the last few years
    and there are a lot of townhouses available to rent

    Even tho franskton would release more funds,
    Wouldn’t it be better to sell the lesser performing property?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Could the lesser performer become the greater performer in the years ahead?

    Loans must be secured against property, unless they are personal loans?

    Which would release more funds after repayment of the loan and CGT?

    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/

Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic.