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Adelaide inner south (rent or sell?)

Discussion in 'Where to Buy' started by Noodlesm, 13th Oct, 2016.

  1. Noodlesm

    Noodlesm Member

    Joined:
    14th Apr, 2016
    Posts:
    12
    Location:
    SA
    Any thoughts of keeping or selling of this property?

    $700k at Adelaide inner south. Good condition (renovated), purchased 3 years ago. 3 bedder with decent landsize.
    5km from the city, good school zone and transport
    Currently mortgaged around 80%, so $550k remaining in the loan

    Rental option:
    Weekly rent around $500(?), not sure about the rental demand...
    Rental loss at current interest rate would be around $10-15k a year. Family has sufficient disposable income to support the the cash loss.
    Area growth rate is around 2.5% (not sure if this is under-estimated)
    After taking consideration of the negative gearing effect and area growth, it is at a neutral position.
    The house has a large backyard so the concern is garden maintenance may put of renters.

    Sell option:
    Property probably will sell around $700-750k. No gain no loss after taking account of the agency fee. I guess this is a stress free option.
     
    Perthguy likes this.
  2. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,580
    Location:
    Adelaide, SA
    Which suburb is it in?

    Rent - I've had massive demand for our other inner south properties like goodwood and wayville recently.

    And long term growth is a sure thing in areas like that.
     
    Noodlesm likes this.
  3. Noodlesm

    Noodlesm Member

    Joined:
    14th Apr, 2016
    Posts:
    12
    Location:
    SA
    Fullarton area (zoned for Unley high).
     
  4. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,167
    Location:
    Adelaide, SA
    What do you do with the funds after selling - I'm assuming this is currently a PPOR and you're buying/bought another?

    Adelaide is going quite a healthy growth phase at the moment, particularly in the inner suburbs so people are trying to grab onto as much as they can. It may be worth considering where we are in the cycle and whether you want to deleverage out of an area prior to any major growth in a long term tightly held area (inner south/east).

    A loss at 10-15k/yr sounds like the interest rate might be a tad higher than necessary - if this is a primary motivator to selling up might mean it's worth considering what mitigants (reducing your loan costs) can be achieved to make it a more viable/stronger investment.
     
    Perthguy likes this.
  5. Noodlesm

    Noodlesm Member

    Joined:
    14th Apr, 2016
    Posts:
    12
    Location:
    SA
    It's a PROR at the moment. We are moving so looking to buy in Melb. Melb is at the top of the cycle we aim for a more conservative buy there (if lucky) and hopefully to keep the one in Adelaide like you said, Adelaide is at the healthy growth phase.

    $10k-15k loss is a conservative estimate considering other cost which includes ppty management fee, council rate, maintenance and etc. As this will be an investment property, I think I should max out interest on this to free up the capital for the future PROR in melb.... having said that I am currently looking for a broker who knows Melb mkt....
     
    Perthguy likes this.
  6. Noodlesm

    Noodlesm Member

    Joined:
    14th Apr, 2016
    Posts:
    12
    Location:
    SA
    Hi D.T.,
    Are you able to send your rate for ppty management? Cheers