Confused- Should hold or sell (Regional SA)

Discussion in 'Property Experts' started by Auskelp, 12th Sep, 2019.

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  1. Auskelp

    Auskelp New Member

    Joined:
    12th Sep, 2019
    Posts:
    2
    Location:
    Riverland
    Hello,

    My husband and I purchased a property in regional SA approx 3hrs from Adelaide in the mid $400,000's approx 2 years ago. The median house price in our area is only $192,500.

    Having only been in this area for 5 years (Darwin prior) we struggle mentally accepting the slow property growth in the area. We came from an area where we put in $10k of landscaping or renovations in and added $15-$20k back on the property. Housing prices in our new area have not changed much in the past 10 years and whilst the home we have is gorgeous we wonder if it's smarter to move it on and invest elsewhere to recover.

    We do not plan on staying in this area forever so if we kept it and tried to lease it out I dare say we would only fetch $300-$350p/w as the affordability of the renters is not there and they are more looking for the $250p/w properties.

    Would anyone know of a property advisor who we can speak with that can look at the area and number crunch for us? Confused if it's worth holding onto this property long term or get rid of it sooner rather than later. Thank you
     
    New Town likes this.
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    Hey there, and welcome to the forums!

    A home and an investment are very different things :)

    As an investor, we'd generally look to be buying around the median price for exactly the reasons you've stated - there's simply more people buying and renting at that level.

    Demand is higher, and you need that for both rental return and property growth.

    If it's a negative cashflow proposition, with no growth prospects, it makes no sense to throw money in that pit by choice.

    If it's postive cashflow b/c your loan is low...what's the opportunity cost? What else could you be doing with the cash you'd get if you sold?
     
  3. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW

    You paid $400K which is double the current median price for the area - not good from an investing POV.
    Prices have not moved in the last 10 years - are there any plans for infrastructure to this location? Why will they move in the next 10?
    It's 3 hours out of Adelaide and Adelaide is not a fast grower - its slow and steady.
    If you turned it into an IP, then most tenants could not afford the rent you need to ask.
    Then there is the opportunity cost as @Jess Peletier mentioned.

    From an outsider's perspective the way forward is clear. I think the term is "shoot the dogs".
     
  4. Auskelp

    Auskelp New Member

    Joined:
    12th Sep, 2019
    Posts:
    2
    Location:
    Riverland
    Thankyou for the response.

    My husband and I are in a much different headspace now to what we were in back when we purchased. The purchase was from the heart as we wanted our children to live in a home like we once had in the NT. Now that we are educating ourselves with investing options we would definitely change a few of our decisions.