My investment journey – a reset and re-drawing of my plan at age 40

Was this their Income & Equity Accelerator funds?

 

All I wanna add is dont be down, your in the top 10%
Your have done better than 90% of the population will ever do over a lifetime.

You seem pretty clued up based on this thread and will surely sort it out.

The only direction is forward

 

Agreed. I didn't realise this. I would also add, the PM's in these areas seem to be more chumy with the tenants. 2 out of the 3 PM's I had were this way.

Yes. Unsure the series. I think some of the series did OK.

Thank you for your message of support, it does help.

 

Hi - I remember your posts from Somersoft.

Sorry to hear about your situation - particularly the personal stuff. But it's not too bad really - two steps forward, one step back. I can relate - you can't expect everything you touch to turn to gold but are you really any worse off than if you hadn't invested at all? Even if you are, the learning has been invaluable, has it not? So give yourself a pat on the back for giving it a red hot go. Have to acknowledge the role that luck plays in all this - nobody was born in a log cabin they built themselves!

Can't help on the outlook for Gladstone or Melbourne for that matter but a few ideas:
- Make sure all your liquid cash etc is offsetting the trust loan accounts to absorb some of those tax losses.
- I've found a "whole food, plant based" diet very effective for weight and mood issues - www.nutritionfacts.org
- If you're struggling with the stress and negative psychology then a cut and run strategy may be the best option for your health and to give you that reset. Do whatever you need to do to protect your health - it is far more important than your wealth and it's worth taking a bath or two to protect it. Stress has real health implications and financial problems are an acute source of stress...

Good luck with it!

 

An update... I've just been told the Gladstone market did have a little rally at the end of last year, although it's become weaker again.

I was originally told to expect around $370k mark (for the property I paid $600k for).

Now my vendor advocate is saying it could be something like $340k, an additional $30k less.

Given I have a $512k loan on this property, after selling fees I'll probably be left with no property an a -$200k loan just for this one. The other property would be a similar story.

It would take me 10+ years to pay off $400k worth of loans, and that's while I'm supposed to be starting a family (once I find someone new).

I'm still thinking I'm better to proceed and sell for stress/mental health reasons. What are peoples thoughts here?

 

If it was me and causing me to be mentally/physically unwell then I would cut my losses and move on. Find ways to recover from my mistakes.

To me my own well being is number one. Do what you feel is best for your self and if thats selling then just do it and have no regrets.

 

I would prefer to cut my losses and move on... it might seem like a big hurdle but the stress relief would be well worth it.. and you can have more creative ways of investing in Melb and try to gain 200k back per property here... or any sort of flip to make some gain later on...

sometimes its best just to get rid of lemons when you can't make lemonade out of them..
I do wish you all the best in your journey... property investing is never easy.. people that do not invest usually don't see the hard work, sweat and blood poured in it..

good luck!! i am sure you will bounce back again

 

Thanks guys. I have decided to still proceed with the sale. My advisor said it's difficult to recommend the sale but the way he sees it there is zero chance of growth for the next 1,2,3 years and so I'd be 20, 40, 60k down in cashflow with a sale price probably much the same.

 

My tip is to sell duds as they can bleed you quickly with cash outflow that kills you long term. Weight up the payback period for a loss v's the cashflow problem over say 3, 5, 7 years and it may demonstrate why you need to sell. Numbers will help show the way. And then talk it over with peeps you trust for advice.

If there are two sell the smaller problem first.

Sometimes the solution to avoid cash and loan issues is to sell two properties together. One a loss and other a gain. They may offset. And one may release surplus cash to cover the loan shortfall.

Once you have cleared the decks its a bit easier to be positive and find a good time to get back on the saddle.

 

Thanks for sharing your story with us.

I also believe you should continue and try and sell the 2 Gladstone properties. We were in the same position 2 years ago - 2 properties purchased in Gladstone in 2010 and 2011. Rents and values plummeted and a tenant trashed the house so had no rent coming in. We couldn't continue to hold and were bleeding money every month. We took the decision to sell and sold both properties last year with a shortfall of over $400,000. It was causing us (Particularly me) so much stress and worry, not worth it. It has set us back years and even with the massive shortfall I don't regret selling one bit and believe it was the best thing for us to do.

Good luck to you, stay strong you will recover

 

But on a cheerful note, how is your little one going?
A little girl if I remember correctly!
Marg

 

Molly is going really well thanks Marg She's 6 months now and just starting to crawl.

Em

 

Oh, she’s just beautiful.
Well worth waiting for!
Enjoy every precious moment.
Marg

 

Guys - I just wanted to say a quick thanks for your replies. I read them all carefully and consider what you all have to say. Ems, thanks for sharing. Looks like we are in the same boat almost exactly. Selling two years ago was wise.

 

Hey @Orion , my story is so similar to you it’s crazy. I’ve also just 40 & my health has been a mess with my Gladstone unit. Bought at 250k & an appraisal just came back yesterday at 60-70k, really kicking myself with this one, especially having paid 10k from a dodgy buyers agent who's outdone many clients.. Nathan .. don't need to add the surname. Anyway but taking all of the above on board I want to try sell & reset. I’d have to sell one of my Melbourne properties to try balance out the loss, but I believe we need to sell the Gladstone one first to consolidate the loss before selling anything that gives a capital gain. Only then the loss can be offset properly.

My last year’s rounded numbers for any of the number guru’s who may also be able to offer their thoughts:
2/1/1 Unit Bought 250k Rental 120pw Gladstone Central
Income:
$4700 Rental
TOTAL INCOME $4700
Expenses:
$6000 Depreciation
$11000 Loan Interest
$4200 Rental / Maintenance Expenses
$2100 Council Rates
$2100 Body Corp
$500 Landlord Ins.
TOTAL EXPENSES $25,900

Please keep us updated with how you go with the sale, very interested to know if you or anyone on here has positive recommendations for an agent. Congratulations on little Molly! That must give you a nice smile in the bigger picture. I’m also expecting my first child in August.
Cheers Clayton

 

Depreciation is not an income... I don’t understand why people always have this mistake. In best case scenario you get back 30-42% of your depreciation as a tax refund. That’s it.

Then, when you sell your property you will have to reduce your cost base by claimed depreciation. So no. It’s not an income.

 

Your right @Noobieboy, I should have known that while quickly putting in the numbers. That makes things a whole lot worse for sure!

 

Sorry to hear of your situation Clayton. There seems to be a few of us going through similar. I used Bevan Rose at Gladstone Real Estate to sell both of my properties. I can't recommend him highly enough. It was a difficult task but we got there in the end and as we are in Perth he helped arranging/meeting trades at the property. He's a local and knows the Gladstone market inside out.

Good luck with the sale and the birth of your first baby! The best gift!

Em

 

Thank you Em, I've been in contact already with Bevan & he was quick in reply. This will be a very painful process but thank you again.
Seems there are a hell of a lot of mortgagee sales happening since 2016 which has really pulled the market down, wonder how long it would take to clear these out as I'm sure only then the market will have a chance of improving.

 

Nathan's company got you into a unit in Gladstone that cost 250k but rents for 120pw? I thought they were all about positive cashflow.