Hi there We have a new PPOR loan with Liberty on IO. Our exit strategy is to sell an IP or 2. IPs are in Wollongong. Free standing houses. We have gotten REA to value them both in the past fortnight as is. If we sell both IPs we would clear half our PPOR debt. Then move PPOR loan to P&I with another lender. We are trying to figure out whether to sell both, or just one IP this coming spring. They'd net roughly the same amount each. Is it good practice as an investor to clear PPOR debt as much as possible? Or, hold onto an IP because it's got good value. I don't know what questions to be asking. 1. Why keep second IP and only sell 1. - it's geared at 75LVR fairly high. Selling only nets us about 115k once all expenses paid. But that's still more than $0. - It's in a good area and will keep going up. If we were to sell it, then it would be hard to buy back into this area again since its gone up so much in value. We wouldn't buy here but it's handy having a local IP. - easier to focus on doing up 1xIP at a time. 2. Why sell Clear as much PPOR debt and reduce servicing costs to free up cash flow. Seller's market in Gong right now. Can always buy another IP sometime in the future. Thanks
This doesn't usually happen in my experience watching others do similar. Hold onto your assets, but concentrate on paying your PPOR debt.
Yes, DT, that is exactly how we are feeling. Because it was a lot of work to acquire them, and now we have moved into our PPOR after Rentvesting for five years, we feel tired and don't have interest to acquire anything else. But the problem is the mortgage is really big, so we need to do something. Interest rates will go up again. and then we will be really stuck. I really don't want to sell because they are CF neutral too. But we need cashflow. any ideas ???
Any way of increasing income? Then can pay off PPOR a little faster and keep IPs. That's what we have been concentrating on this year.
I'd hang in there. In my experience it gets a lot easier to hang onto properties. The results of keeping existing properties rather than trying to replace them later tends to yield far better long term results. That said, if a property isn't performing and doesn't have future potential, getting rid of these can be useful.
Thanks for your thoughts. They are performing well, strong rents and demand, good CG. Increase income and reduce other costs are our current focus.
This is so true - a lot of people are assuming right now that they can just buy again - the rules are changing so much that its unlikely for a lot of people that they will be able to replicate what they've done in the past due to the restrictions UNLESS they are in an exceptionally strong income position. This isn't the end of the world for those starting out - it just means that from day 1 you need to be carefully considering how you will afford your debt over the long term, how to grow your portfolio whilst decreasing the overall LVR and looking at how you can be efficient with your overall financial strategy - debt recycling, other asset classes etc.
So true, I was told by my excellent broker that I'll need to earn an additional $2k per month in order to service with Westpac and get out of liberty.
