VIC Geelong 2018

Discussion in 'Where to Buy' started by Pentanol, 1st Jan, 2018.

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  1. Brendon

    Brendon Well-Known Member

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    11th Jun, 2016
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    What are everybody's predictions for Geelong 2019 and beyond?

    I bought in Whittington early-mid 2017 and have made a nice gain but am considering selling in the next 6-12 months to realise some profits and put the money into other projects.

    I think the area still has a fair bit of potential mid-long term it just comes down to whether or not I can make the money work better elsewhere if prices aren't going any further in the short term
     
  2. Ian87

    Ian87 Well-Known Member

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    I am in the exact same boat, bought in Hamlyn Heights and really hoping for another 6-12 months growth. If it continues on like it did last year I reckon I will sell up and take my cash. But also think I might regret that decision in 10 years, but I can do a lot of stuff I want to with the profit right now rather than delay it any longer.
     
  3. MikeyBallarat

    MikeyBallarat Well-Known Member

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    I don’t think that Geelong’s going to repeat it’s spectacular 2016-18 gains this year, but I don’t expect it to go backwards either.

    I would probably look at re financing rather than selling, myself. Now that the interest only cap has been lifted, it probably makes more sense to me to extract equity (which you would have plenty of thanks to capital gains and that ace reno you did) and either pad out your PPOR offset or invest elsewhere. This way, the grubby ATO won’t get their dirty mitts on your money via a CGT event, you don’t have to worry about selling costs, and you don’t miss out on future Geelong gains.

    You bought yours for $315k, and Domain says it’s worth around $405k right now (I think it could get higher personally, but for the sake of the exercise I’ll use this number). Say you bought at 80% LVR and refinanced at 80% LVR now, that’s going from $252k to $324k, netting you $72k extra to play with. When borrowing $324k at 4.7% interest only for 5yrs over a 30yr loan term (a conservative rate I plucked out of thin air) - that leaves you with $293 per week to pay, easily covered by the $315 you’re receiving in rent. That’s not even taking into account if you leave some of that cash in the Whittington IP offset.

    Sure, you still gotta pay rates and Barwon Water charges (say $1600 per year for rates and $180 per quarter for water) but that’s a hell of a lot less than agent fees (say 2% of $405k = $8100) and CGT.

    Not advice, just opinion. I’m an opinionated guy :D
     
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  4. Brendon

    Brendon Well-Known Member

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    You know my numbers very well! Any chance you want to be my accountant? Haha

    You are correct in a lot of ways however the thing you haven't taken into account is serviceability.
    I'm lucky enough to have enough equity in properties through some quick renos and market growth but I am basically at borrowing capacity. I have enough for my current projects/subdivisions but will then be a little stuck.

    @Ian87 exactly the same boat! I think long term I may regret it but at the same time you don't go broke taking a profit....
    It's a good problem to have and I suppose it just comes down to what you're going to put your profits into...
     
  5. MikeyBallarat

    MikeyBallarat Well-Known Member

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    I’d love to be your accountant mate...please ignore my total lack of qualifications in the field though...:eek:

    You’re right, I didn’t know what your serviceability was like. However I still wouldn’t sell unless I absolutely had to, because of the exit fees and added costs involved regarding buying something else. It’s by no means a dud IP, it’s done well for you growth wise, and shouldn’t be too troublesome to hold. I’m not anticipating any market crash in Geelong either.
     
  6. David Shih

    David Shih Mortgage Broker Business Member

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    Sydney
    I would tend to agree with @G TOWN here @Brendon - all the sales cost, CGT etc is just gonna eat away most of the profit you've made. Given where we are at the moment Geelong is still affordable in comparison with Melbourne prices, not to mention Avalon airport has now officially turned international and employment prospect is looking bright.

    I think Geelong will still be great for a long term hold - steady growth as long as the yield stacks up. Especially for those of us that have entered this market just before it shot up which is why I'm still intending to keep it.

    Having said that though - I would say crunch your numbers and be realistic. If you believe that you can make a much more stellar return by putting your realised profit into a project that'll net you much better return then go for it :)

    Cheers,
    David
     
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  7. Lions4Eva

    Lions4Eva Well-Known Member

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    25th Jul, 2017
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    Location:
    Melbourne
    Holding.

    Great yields, a bright economic future in the region and with good growth still yet to come - I don't see why I shouldn't be holding onto this for the long term. FWIW for those who don't know, I bought in Corio.
     
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