All Topics / Help Needed! / Gladstone

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of MollyMolly
    Participant
    @mollydog
    Join Date: 2018
    Post Count: 4

    Is there anyone out there who is struggling with a property in Gladstone? And are there any property advisors who can help come up with a plan to help us extract ourselves from what has become a financial burden? We would be willing to pay for advice. We have 2 performing properties in Perth and three in Gladstone and we can’t sell in Gladstone because of the losses we will incur. At the same time it would be unwise to sell our performing Perth houses, ( We live in one ) because of the capital gain that would help negate the losses we will have from selling in Gladstone. Thanks if you can help

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Molly,
    Ouch !! I would be interested to hear thoughts from others too. Meanwhile, can I encourage you to add a bit more info (vague if you like, but as near factual as possible) so that the bigger picture comes into view.

    e.g. are you renting 4 properties currently, for what rents, vs what mortgages, and what are estimated values. There might be some goodness in selling one Gladstone property (even at a loss) to “stem the bleeding” – and that would give you an advantage when you later sell a profitable property. I have always heard “Take your losses first – they can be carried forward to offset future Capital Gains” – but check that comment with your adviser in case things have changed, or in case your structure needs a different path taken.

    Let’s see what others have to say,
    Benny

    Profile photo of OverloadedOverloaded
    Participant
    @overloaded
    Join Date: 2014
    Post Count: 5

    Sorry to hear that Molly.

    I can’t really offer any advice but I am involved heavily in a Gladstone based business and I know the area and community well. Based on what I know about future work opportunities in the area, I am of the opinion that there will be no growth there for the foreseeable future. There are numerous residential and commercial properties still vacant and rental yields are very low which I am sure you already know. Lots of businesses have either gone under or packed up and left. Those that are still there are struggling.

    There is some growth potential in the Rockhampton area with a huge defence spend at Shoalwater Bay forthcoming but I don’t think this will carry through to Gladstone unfortunately.

    Where exactly in Gladstone are your properties?

    Profile photo of MollyMolly
    Participant
    @mollydog
    Join Date: 2018
    Post Count: 4

    Hi thanks for the reply We have one in New Auckland paid $530,000 now worth $250,000 – $280,000 ( found out today that it has dropped again under the advice of property group getting $250 per week rent. A second in Tannum Sands paid $430,000 now couldn’t sell for $380,000 $320 per week rent and one in Clinton no mortgage paid $245,000 for it $220 per week rent… propping up others. I know we are not the only ones in this situation.We were hoping that things may have got better by now.

    Profile photo of MollyMolly
    Participant
    @mollydog
    Join Date: 2018
    Post Count: 4

    Thanks to both replys

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Molly,
    With a few of the “numbers”, some thoughts become a little clearer. I am guessing that the first two properties have some mortgages and I’ve assumed 80% LVR. If anywhere near correct, then that tells me that Tannum Sands is the one causing the most bleeding. Your current portfolio up there must be costing you plenty each week. Even if your mortgages are IO, your Gross is still short a few dollars a week – and other costs (Ins, RE fees, maintenance, etc) haven’t even been factored in.

    As such, here are a few thoughts based on the little I know so far:-

    1. Gladstone’s growth is looking shakey – thus you probably wouldn’t want to “hold” these for Capital Growth.
    2. The returns are poor too, so unless you can find an option that returns a higher rent, you probably wouldn’t want to keep them for Income either (except maybe Clinton). Thinking of Incomes though, can they be increased in any way? e.g. airbnb-style letting, or finding a local business that has people “coming and going” and they need local accommodation other than expensive hotels?
    3. Because of (assumed) mortgages, if you sold one you might need to sell Clinton as well, to have its equity pay off the other’s loss. That would then leave you just one negative geared property up there, and help with your DSR calulations when looking to any future IPs.
    4. From what I hear, Perth might have “bottomed out” – although I believe we never know “bottom” until it has already passed. Thinking though that future Growth is more likely to come from Perth than Glastone, look at buying something far better in Perth once you have your DSR sorted once more.
    5. Without more accurate numbers, I can’t add much more except that general viewpoint (above). Main thing is to work out what the numbers tell you. How much better will your position be once you have quit one or two of the Gladstone IPs (or even all three)?
    6. As I mentioned earlier, taking a loss ahead of any Capital Gain helps to lower CGT from other sales, and losses can be “carried over” to be offset against gains in future years too (I think that is all correct, but do get proper advice).
    7. Though taking a loss is never good, doing so earlier (or sooner) might be preferential to having a poor investment drag on for years, making the Banks rich while you struggle. Maybe, like they say in the sharemarket, “Cut your losses and let your winners run”. I do realise that even taking a loss can temporarily set you back – and some can’t even afford to sell (but that is not you, thanks to Clinton).

    Molly, do take this in the spirit in which it is given – i.e. NOT as advice, but as a collection of thoughts that might help you to focus on other possible options to help you out of a bad investment or two.

    Benny

    Profile photo of MollyMolly
    Participant
    @mollydog
    Join Date: 2018
    Post Count: 4

    Thanks Benny for your input. I really appreciate your constructive thoughts on this and taking the time to write. We put Tannum Sands on the market and got nowhere but that was about a year ago but I certainly agree with you that this would be the ideal one to go first. It has just been rented so we will wait out 6 months and try again. And finally then get some clarity for the future and relief.It has been a very stressful time and I feel for anyone out there going through the same experience. Thanks Molly

    Profile photo of daniel vicdaniel vic
    Participant
    @daniel-vic
    Join Date: 2013
    Post Count: 120

    Hi there molly

     

    how are these properties going now ?

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 189

    4. From what I hear, Perth might have “bottomed out” – although I believe we never know “bottom” until it has already passed. Thinking though that future Growth is more likely to come from Perth than Glastone, look at buying something far better in Perth once you have your DSR sorted once more.

    Perth has been performing well for the past 18 months, and is continuing to perform well for the moment despite all the interest rate rise.

    Of course, nobody has a crystal ball to say if this will continue and if so for how long.

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