Ips..sell...hold??

Discussion in 'The Buying & Selling Process' started by Valentino, 21st Oct, 2016.

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  1. Valentino

    Valentino Well-Known Member

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    We just bought a new PPOR (yay!!!!), 20% deposit.

    Now, what to do with two IPs.. Both 79% lvr, cf neutral and gone well in cap growth over last year.
    If we sell its a great time to sell.

    Our original plan was to rent, buy IPS in cheaper areas then sell all and buy a PPOR mortgage free, then start investing again later. To hold or sell:

    The "why hold":
    -if houses in oz double in val every 7-10 yrs on average, then it's appealing to keep them and watch the value rise and sell in 20 yrs.
    -plus they are costing nothing but a few headaches to keep.
    -we only have 21% equity... So not much in our pocket if we do sell. Seems a waste to sell now.

    The "why sell":
    -one ip has constant minor but significant repairs required and we are not handy. There's always some problem and costs needed
    -we'd get enough to pay 140k down on a 650k mortgage.

    At this stage I am more inclined to hold n DH is inclined to sell, pay down and buy a hassle free IP later on.

    Thoughts?

    Thankyou
     
  2. Valentino

    Valentino Well-Known Member

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    I forgot to add that the market is strong here so if we did sell now is a good time to do so. Feeling pressure to decide... Where'd I put my crystal ball.
     
  3. larrylarry

    larrylarry Well-Known Member

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    What does your husband really want? A family home paid off quickly? $510K still a big mortgage. Will investing in IPs help pay off the mortgage quickly? I guess it depends on both of you want to achieve. Has the market where your IP hit the peak? Costs in maintaining a property cannot be avoided.
     
  4. Tony Fleming

    Tony Fleming Well-Known Member

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    Congratulations on the PPOR. As Larry has said it depends on so many personal variables only you know. I'd personally hold the IPs rather than pay CG tax/selling costs. You've already spent stamp duty,time buying costs etc on the two IPs. Can you do some cosmetic renovations to try and make them more cash flow positive?
     
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  5. Valentino

    Valentino Well-Known Member

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    Yes well we are debating whether to spend any money or just let it as is.

    We could lift ugly cheap (but still good condition) carpets on two bedroom floors n polish timber, and we r putting in a second loo.

    We have ugly grey schoolroom type carpet in dining room. Underneath is concrete slab. Any ideas to improve at low cost?

    Or... Just leave it all as is.

    Is there a month to renew leases, when it's generally easier to find tenants? I would think January.
     
  6. larrylarry

    larrylarry Well-Known Member

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    Floating timber on concrete, you can DIY. January still a bit slow but end of January should see activities. When signing a new lease try to get 14 months rather than 12 months.
     
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  7. Valentino

    Valentino Well-Known Member

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    We think it's peak will come soon, it's wollongong. Oops I answered all the questions but it posts them in italics as pat of the quote!
     
  8. Tony Fleming

    Tony Fleming Well-Known Member

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    Floating floorboards are good and easy to do. Sometimes I search the local buy swap and sell pages and pick tiles or floating floorboards up for free. Massive tight arse I know but it's all really easy to do and can make a massive difference.
     
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  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    What would the CGT be on selling?

    If you sold could you buy another (as in do you still service?)

    Think Debt Recycling.
     
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  10. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    If it were me, and they are houses in Wollongong I'd hold. Should do well long term.
    Wollongong will be considered by more people as they cant afford Sydney for houses, Wollongong isn't a bad alternative and some people commute. It's a location in itself already with infrastructure and university. Cash flow is fine, they aren't hurting you and rents should go up over time.

    Your PPOR - I'd just try to put all my spare money into the offset. Do this especially as the interest rates are low. We took out a 1.28m loan for ours - 650k is a piece of cake in comparison. If you are a 2 income household with decent income you can still smash the home loan with these low interest rates.
     
    Last edited: 22nd Oct, 2016
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  11. Valentino

    Valentino Well-Known Member

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    Thanks all. Id like to hold coz it'll be at least five years til we invest again... We want to focus on family life for a few years.
     
  12. Magoo

    Magoo Well-Known Member

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    I'd get rid of the IP that continually needed $ sunk into it ( if you're thinking long term ) It's the attention " time " factor that people don't measure enough, because we know that time = $.
    You may think you're losing capital growth opportunities, but you're picking that up in your PPOR & more equity to go again later. Either way you're doing well....well done:)
     
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  13. Marg4000

    Marg4000 Well-Known Member

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    Have an each way bet - sell one (the most troublesome) and keep one?

    If you keep one or both, look up forum posts on debt recycling so you can put every dollar possible into your PPOR offset account.
    Marg
     
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  14. Nlang

    Nlang Well-Known Member

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    I'm with Marg we just got rid of our troublesome ip that was giving me headaches
    I feel amazing for it
    Didn't want the hassle and got an offer I couldn't refuse
    And more money to put into our ppor when we eventually get one
    I don't know all your circumstances but good luck and sounds like you are killing it!
     
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  15. Valentino

    Valentino Well-Known Member

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    Yes Magoo that's my biggest stumbling block...thinking CG will happen more if we have more IPS. I've spent a lot of effort to buy and maintain and renovate these two homes, one in particular- the problems one. It's become emotional attachment, like an annoying but precious friendship!
     
  16. Marg4000

    Marg4000 Well-Known Member

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    It seems you have become emotionally attached to this property that may be clouding your thinking.
    You have to weigh up the possible future capital gain along with the expenses and hassles of keeping it, compared with what you would do if you sold it.
    Marg
     
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  17. Valentino

    Valentino Well-Known Member

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    you are right Marg...
    The other thing that also gets me is that let's say we sold it for $600,000 then by that time we clear the debt and tax we have $65,000 in our pocket. It does not seem much.
     
  18. Marg4000

    Marg4000 Well-Known Member

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    So there you gave it in a nutshell.

    $65K now
    or
    Hassles of keeping, but plus possible capital gain.

    Also factor in how much it costs you each year (nett) to keep the property, or how much it is paying you.
    Marg