Melbourne CBD - received offer over ~28% what I paid in 2012...sell or hold?

Hum as per Gockie's suggestion I talked to my broker about loan substitution / porting. Seemed a lot easier than I expected. If I could actually redeploy my money would this alter any of your thoughts on this?

 

So what would you do instead?

If another property, you will be up for RE commission on sale plus CGT on this unit, plus stamp duty on new property, plus legals on both.
Marg

 

Actually , issued gockies comment re substituting security . We have done that on two occasions in the last year , so that might be something to think about as it does give you the opportunity to buy somewhere else .

Cliff

 

OP I would sell most likely.

Did you need to have other place settle at same time, I imagine yes unless you were able to give a cash guarantee.

 

If you can redeploy the money sell

 

Hi mate not advice, simply my opinion based on my own experiences and thoughts.

Firstly you can change colour, update a kitchen, remodel a bathroom but you can't change a location.....you could do far worse then Little Collins St!!
As many other posters have stated, an attractive heritage facade (character) is something that will not be replicated and the most probable scenario is that heritage buildings unless listed will be demolished to make room for more "dog box" apartments. Admittedly a heritage building will not appeal to everyone but I personally think it's more of a pro then a con.
From a financial standpoint if this apartment is not a financial drain and is cashflow positive I would be holding.

I always look at investments as metaphorical pie pre cut into slices, every time I sell there's someone taking a slice of the pie, r/e agent, tax man, lawyer etc. The more people eating your pie the less for you.

Everything I've sold I've regretted and now live by the old don't sell unless you have to, especially when your talking well positioned real estate in the heart of a city who's population is set to swell in the foreseeable future.

 

So if sold where would you buy?

Also consider performance of asset 28% since 2012, great, but look at what Melb has achieved on average in this boom cycle since 2013?

I recall you thought this was not a great investment why?

No clue whether you should sell or keep, for me it would come down to where I could park the funds, or reduce risk or offload an asset/product that may be an average performer when boom cycle is over

71 in block? That is too many for me

No right or wrong, sorry not much help

 

Hi guys, ok I think I've come to a decision. I have to sleep on this, but for now it this is where my head is.

Firstly, thanks so much to everyone who chimed in. I can't tell you how much I appreciate the calibre of advice I've received - the names I've seen posting here are, as I'm sure many of you will agree, some very seasoned and highly respected posters. I don't ask for advice simply to say "yeah yeah yeah I'm just going to go with what I had already wanted to do anyway". Your feedback has definitely been weighing heavily on my mind.

So here's where I am: last night I was directly on the fence, but now I would prefer to sell, after I learned how easy it is to port the loan. However, I won't be selling, because given my income is just under the top tax bracket thanks to all my property related deductions, I'm going to get decimated in taxes and agent fees. That being said this is not the driving factor - I still stand to make a profit and Melbourne CBD still looks very unattractive, and ultimately it's about the better investment, so it's almost irrelevant whether I stand to make a profit or loss. The main reason I am holding on is because A) I simply can't think of anything else I would be able to buy for the money I would be left with. I could afford to dip into my cash reserves to get what I really want, but this would cut short the sabbatical I've been dreaming of for 10 years now. I am somewhat risk adverse and need to be able to sleep at night (when I was younger I thought I was a real risk taker, but boy have I learned about what type of investor I really am after a few hard knocks), and I only want to buy in the ~12 suburbs (across three cities) that I know like the back of my hand and have spent years researching. And B) the yield is solid. If my goal is to general a strong rental income to allow me to quit my day job, then this helps me a lot more than the suburban locations I'm eyeballing, especially when I consider options like Airbnb. This is only one of two properties I own that are located in areas that I could really consider Airbnb. After CBD rental prices nose dived in 2015 after all the big projects came online I was freaking out, but they've since stablised again and finding good well paying tenants has become a lot easier than I anticipated.

I'm happy for anyone to challenge my thinking, tell me how wrong I am...I mean, screw ego, it's all about making the best decision. But this is where my head is currently.

 

I won't challenge this thinking, just mix it with properties that meet your other criteria future CG, or source properties where you can add value to develop in future etc not necessarily Melb for obvious reasons

 

I haven't really been following this. Is it just within the CBD? Or does it go to the inner suburbs like Richmond?

 

Since when cbd rental nose dived in 2015? It only went up every year as far as I know. Anyway, glad you made your decision.

 

I definitely felt it. Maybe it was just the months it happened to be vacant. Sat on the market for ages, had to reduce my rent twice I think. Maybe it was just bad timing, but back then my agent said yeah things had slowed down a lot.

I just searched through like 6 pages of rentals. Rent prices have clearly gone up in the last 3 years. I haven't actively looked in all that time. What's caused this? There are more apartments going up every year?

 

Just the CBD - Hoddle grid + Vic Market + Docklands.

 

I have a theory. All the new developments in the CBD, maybe there is enough demand for them from a rental perspective, it's only when many huge developments come online at the same time that causes the issues. But once they are soaked up there's enough demand for them. It's just the market can't handle so many in a single shot. Maybe that's what happened in 2015. Purely speculation though.

I noticed even the rubbish 40sqm 1 bedders are renting in the mid to high $300 range. 3 years ago they were low $300's. Not crazy growth but damn, it's a surprise to me! I just finished scanning about 10 pages of rentals and yeah it seems the average for a 1 bedder is about $360 p/w now. Anything fancier gets low to mid $400 p/w.

 

Timing is important yeah, possibly there were a few new settlements coming during that time but a lot of these new built completions don't hit the market so quickly. They come out in stages, and they all get digested fairly quickly. Plus, a lot of these are small size, and expensive, so that shouldn't hit yours too badly. Yours if you furnish it nicely should be able to cash in $550-$600.

 

I've always thought if I furnished it I'd get short term tenants. I really prefer people that just stay there for many years, even if it's a slightly lower rent. Is this assumption unfounded?

 

If you want to sell, but not this financial year, I suspect you may be able to delay the potential buyers - if they are so keen to get into that building that they have got the agent to contact you about your place that wasn't even for sale. Say "check back with me in late June" - sign contract 1 July? It's less than 3 months away.

Only hitch would be if they have contacted other apartment owners and buy something else - but nothing to lose trying.

 

I've read that properties in the area served by the free trams are doing much better than those a bit further away.
Marg