Didn't think it could get any worse...

Discussion in 'Investment Strategy' started by Ems, 5th Jul, 2016.

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  1. Bayview

    Bayview Well-Known Member

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    Are you for real?
     
    Bayview, 6th Jul, 2016
    #21
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  2. wylie

    wylie Moderator Staff Member

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    I might have this wrong, reading it the wrong way, but here is my suggestion.

    If you sell the IP rundown house you lose $150k. Would doing a tidy up lessen that loss? If so, then the suggestion of getting someone in to do the tidy up (family or yourselves if possible) might lessen that $150k loss. If you cannot spend $1 to save losing $2 or more, I wouldn't bother.

    I cannot help but do quick maths on $150k loss. At 5% interest only that is $144 per week if you could absorb that into your PPOR debt. Don't forget the cost to sell and rebuy a PPOR. I've used estimates below, but just to give you an idea in case you've not factored this in.

    PPOR commission on PPOR sale estimate $400k - $11,000 including $500 advertising
    Purchase new PPOR when you can afford one - Stamp duty will be thousands more?

    You would be paying rent which is acceptable if you are putting your money to use elsewhere, but paying rent and making that loss, might not be the best way to go.

    I'm not sure if there are kids involved, schools that might have to be changed, or the "lost" money if you are renting. People who invest and rent can make their money work hard, but if you are choosing to sell your PPOR and rent, then you might be better off absorbing the loss into your mortgage and not uprooting your family, adding more stress by looking for a rental and the added stress of moving at least once, maybe more often.

    I think it is worth modelling the scenario of selling the PPOR, how that helps you financially but not forgetting the costs to sell, cost to move, cost to buy back in again that are hidden and is further wasted money just to get another PPOR, regardless of whether you sell and take the loss on the IP house.

    Good luck. At least you are searching for a way forward. Kudos for that.
     
    Last edited: 6th Jul, 2016
    wylie, 6th Jul, 2016
    #22
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  3. Plucka

    Plucka Well-Known Member

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    +1, Things don't add up. Surely the poor condition was apparent at purchase time and/or at subsequent inspections or has the tenant damaged the place?

    +2, Gladstone is not going to recover any time soon. Do you really want to be bleeding cash and suffering the stress for potentially another decade or more? The smart thing to do is sell now, every month you wait is just costing you more, both financially and emotionally. Holding on is purely an emotional decision.

    It's one thing to make a bad investment but to not accept it instead of cutting your losses is where people really stuff up. $150k is not the end of the world an being in your 30's not hard to recover from.
    Out of curiosity what made you decide to invest in Gladstone? Property spruiking seminar by any chance?

    Good luck.
     
    Plucka, 6th Jul, 2016
    #23
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  4. HUGH72

    HUGH72 Well-Known Member

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    I think at the time it looked like a reasonable proposition, admittedly one with some risk.
    Those who got in early enough would still be okay but the massive building boom with endless new estates and OTP unit blocks destroyed the market.
    I'm also curious about the old house.

    For the OP I would consider what is possible and run the numbers with your accountant.
    Selling the ppor wouldn't be my preferred option but I don't know the financial details of your situation.
    Hope you can work your way through this.
     
    HUGH72, 6th Jul, 2016
    #24
  5. Plucka

    Plucka Well-Known Member

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    Some risk? Buying 2 properties in a mining related town at the peak of a mining boom, one OTP and the other seemingly in a dilapidated condition none the less? This was only ever going to end one way.
     
    Plucka, 6th Jul, 2016
    #25
  6. HUGH72

    HUGH72 Well-Known Member

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    All about timing.
     
    HUGH72, 6th Jul, 2016
    #26
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  7. Big Will

    Big Will Well-Known Member

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    When a house in Gladstone is costing you the same as a house in Brisbane, that should ring warning signs to..
     
    Big Will, 6th Jul, 2016
    #27
  8. Plucka

    Plucka Well-Known Member

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    Agreed, 2000 would have been good timing, not 2010.
     
    Plucka, 6th Jul, 2016
    #28
  9. HUGH72

    HUGH72 Well-Known Member

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    Just prior to the LNG projects being announced and when all the pseudo buyer's agents moved in along developers marketing OTP interstate would have been fine.
     
    HUGH72, 6th Jul, 2016
    #29
  10. Angel

    Angel Well-Known Member

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    My first thought would have been to refinance the PPOR but as they are a young couple and would not have held it for anywhere near as long as ours, they wont be able to draw any more than 80% total. We all know how Perth values have been the past few years. That is why a chat to an experienced investment mortgage broker would be my first call. We were able to refinance but we had heaps of equity and are both in permanent long term employment.

    Can the posters making insensitive comments please go and play in a different sandpit.
     
    Angel, 6th Jul, 2016
    #30
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  11. MTR

    MTR Well-Known Member

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    unfortunately buying in a market which is falling in real terms means you are losing money, the bank does not give you a "get out of jail" card, unfortunately you still have to pay off debt for an asset which is falling in value.

    PC growth mindset??

    "A wise man never knows all, only fools know everything"
     
    MTR, 6th Jul, 2016
    #31
  12. Agent99

    Agent99 Well-Known Member

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    Have you been in touch with any other agents ? Maybe a quick chat, let them know where your at and they may even do a drive by for you and give a differering opinion.
    Maybe your current agent is not interested in managing yours ? Take a couple of hours and make some calls and make your own opinions from what they are saying. Maybe someone can get some photos for you ?
     
    Agent99, 6th Jul, 2016
    #32
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  13. Agent99

    Agent99 Well-Known Member

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    Maybe there is someone on PC who has an agent to recommend that you could speak to ?
     
    Agent99, 6th Jul, 2016
    #33
  14. bob shovel

    bob shovel Well-Known Member

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    They were one year late but still not bad. The exit was the crucial thing
    2009 entry
    2012 exit seems to be the pick of going by medians

    Telina is back at 2010 prices and actually increased 14-15. The peak was 480k:
    Screenshot_2016-07-06-13-22-15.png

    West Gladstone not looking pretty. Going by the age I'm guessing they're closer to the cbd
    Screenshot_2016-07-06-13-22-46.png
    West happy rock
    2009 314k
    2012 425k
     
    bob shovel, 6th Jul, 2016
    #34
  15. Angel

    Angel Well-Known Member

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    There are two kinds of housing in Telina - 30 year old regular 3/1/2s and big new McMansions just behind Woolworths. The "median" or "average" is a fairy-tale number in between the two.
     
    Angel, 6th Jul, 2016
    #35
  16. bob shovel

    bob shovel Well-Known Member

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    Yes true. That's probably what has lifted it a bit, the locals buying the ppor at bargain prices
     
    bob shovel, 6th Jul, 2016
    #36
  17. Ems

    Ems Well-Known Member

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    We have only had our PPOR for a year now so don't have any equity in it. The only way would be to sell. No kids currently. We have rented before and can again if it helps us in the long run
     
    Ems, 6th Jul, 2016
    #37
  18. Ems

    Ems Well-Known Member

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    Just our PM currently and just waiting for them to return my call. We will contact others once I get the low down on likely costs
     
    Ems, 6th Jul, 2016
    #38
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  19. Ems

    Ems Well-Known Member

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    We are South Gladstone, Toolooa Street
     
    Ems, 6th Jul, 2016
    #39
  20. Agent99

    Agent99 Well-Known Member

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    I personally wouldnt wait for your agent to get these costings, from my own experience there are some agents that see "interstaters" as a cash cow, Beware !
    You could be getting stitched on prices and they have some "tradies" that simply only handyman types.
    I would want them to put all in email form as that way you have a record of conversation and they should have done that within at least 7 days.
     
    Agent99, 6th Jul, 2016
    #40
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