My Dilemma

Gday guys.
What would you do in my situation?

Bought 2 IP's in Brown Hill and Mount Helen Ballarat in 2014.

PPOR - Sydney ($2million) paid off
IP 1 - $320K 4 year old 4 bed duplex owe $250
IP 2 - $380K 35 year old 6 bed house owe $300

Have spoken to agents and they have mentioned that prices have barely moved in that time. The only advantage I have at the moment if offsetting some tax.

Am frustrated seeing outer Melbourne flying in that time and these two just sitting level.

Would you keep these or sell, take my medicine and re-invest elsewhere.

Thanks for reading.

 

They're rural. Don't expect capital gains any time soon.

 

How much do they rent for?

 

I don't see the point in buy and hold in this area but depends on your strategy. If you just want to hold for 20 or 30 years with lowish holding costs, of course you'll have a nice nest egg at the end. I'd tend to agree these days it's just better to buy in an actively rising market and sell at a point you decide (growth slowing or stopped) then sell and put money elsewhere. I think you need to be a more active investor to make real money. Each to their own.

 

you have only had them for 3 years, and it does not sound like you have had them formally valued, just going on opinion of the agents. i would not make any decisions without a formal valuation. are they positively geared?

 

Its OK to sell, especially if you can do better and make your money work for you today.
Holding assets that are either going backwards or doing nothing is pointless IMO.

It takes courage to move forward, most investors will probably prefer to ignore it and hope for the best, the other option requires work, but you are back in control, not the other way around.

Congratulations on owning a $2M primary residence...very nice


It's OK to SELL

 

Hi D.T.
IP1 - $360pw
IP2 - $425pw

Hi Pat
Have organised for this already!

Hi MTR
I was thinking the same sentiments myself.

 

I only like the sound of the duplex in that area, but i would be tempted to sell up both given the areas you are in or can you afford to keep them and purchase a 3rd investment?

 

Also please don't take this the wrong way but imho you need to ask yourself why you chose those areas? If you aren't able to improve your DD/asset selection process when buying then you will likely repeat similar mistakes.

 

Hi Leo

Unfortunately I took the advice of a well respected BA and didnt really do as much research as I should have. I have learned my lesson!

 

Can you buy more without selling?

 

Some lessons we learn the hard way. With BAs my belief is there's nothing wrong with engaging them but you also need to have a good understanding of the markets you are asking them to purchase in for you.

I like to say delegate leg work not brain work.

 

Yes. I have 2 others outside of VIC that are performing well but am at a point of not sure why I am holding these if they are moving sideways.

I agree. The sad thing is I could have thrown a dart on a map of VIC and would have done the same if not better.
This experience has put me off BAs. I know many are good and do the due diligence but I am now of the belief YOU HAVE to do it yourself. If it takes time then it takes time. If you dont have the time then you need to prioritise. Can't trust others who run a business out of sourcing homes to neccesarily do whats right for you!

 

I understand the experience has left a bitter taste on your tongue with regards to BAs. I can empathise. Ultimately no one is going to take better care of your business than you and taking the time to get the best deal for yourself is rarely a bad decision.

There is though one other danger with regards to being afraid to delegate altogether. There are many times in my business I have delegated a task to someone I thought would do a good job and for whatever reason they didn't or worse, were disasters. Now if I took the approach after that to just screw em all and do everything myself, I would never have been able to grow and expand to what I have now. So I had accept that as a consequence of growing and becoming bigger, there will be times when I delegate to processionals and they will just let me down. Just the nature of the business.

 

If you sell and buy again u waste money on stamp duty.

 

they seem to be pretty good rental income. Looks like to be positive gearing.

 

....but but but, that is only part of the story, you need to always look at the BIG PICTURE, paying tax etc. is part of business, its about what makes sense at the time and what will increase your capital/cash flow

 

I agree with MTR. Sounds like there might be more money to be made elsewherr

 

I have always said this from day one. No one has their best interests at heart except yourself. NEVER EVER rely on someone to do your research and due diligence for you. I guess you have learnt your lesson and a big one at that.

You could have made double your money if you bought in Melb instead of regional. You could have got a very nice investment for the price of those 2 combined and made over $650k probably by now since you bought back in 2014.

Honestly I never buy in regional/country cities and towns. Doesnt appeal to me a single bit. Rather put my money in large cities with max 35km from the CBD ideally < 20km with good yields and good potential for Capital gains.

If I was you I would seriously consider flipping both these places. In another 10 years you still wouldnt make much. Re-invest that money closer to Melb or invest in Brisbane - you havent missed that boat yet on that one.

 

YIP mobile

Check out this link, I think you'll find it useful for your next property! Don't give up and remember that it's not how many times you get knocked down that count, it's how many times you get back up.