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

Rents for $120pw now. Was probably over $300pw when purchased.

 

Original rent on the unit was 380 then almost immediately dropped to 300.. 240.. and eventually 120.. clearly they purchased the block & walked away laughing with 7 investors paying 10k each (crazy I know paying 10k buyers fee for a 250k unit!) knowing the market was in decline with vacancy rates going through the roof. Had the sense that something wasn't right when he said it was built in 1995 only to find out it was 1985, should have walked away giving up my 2k deposit! Easy to see & say in hindsight right!

 

All the best. Keep us updated

 

Spoken to a lawyer about this?

 

Gee ok, not good. Caveat Emptor personified.

 

Really unfortunate situation - but it sounds like the Melbourne properties can softed the blow.

I found your numbers interesting as my first reaction was $120pw for a $60K unit is a good return and you would be better keeping it then selling for that price.

But then it looks like the full rent is taken by manatory costs of Rates, Body Corp and Insurance.
That would mean that it is a complete no go for an investor - I guess you are going to sell to someone that feels very confident about future capital gains.

Also, what sort of brief did the BA have in looking for a property - looks like it must have been "just find me a good yield". Did they introduce Gladestone or did you ?.

 

Hi Terry, Really wish this was a pathway we should have explored. Imagined once you sign off then we take responsibility. Was in the process trying to get legal representation when the bathroom roof collapsed in because of a water leak from the above unit, body corporate insurance wouldn't cover it because there was no water proof membrane (not my fault), the above owner didn't pay toward my damages & to make things worse my tenant was moving out just as this happened so couldn't claim through my insurance for loss or rent. Think it went over 6 months before I paid for repairs & found another tenant.

 

Cheers for the message, Yes the brief was exactly that, had negative geared property & the talk of the moment was "cash flow is king" .. They called with a "great buy", showed the numbers and it looked promising for some cash coming in to offset other. After the previous offers being next to train lines, under heavy power lines, main roads I should have known better that there was a catch. Anyway I've spent many years kicking myself, & yeah the numbers selling or holding just don't make sense either way. I could sell the Melbourne property, put the equity into the loan & wait for the market to improve which could be years away.. or sell, take the huge loss & just be rid of the stress. Seems most investors in this forum favor removing the stress is the best way to go

 

False and misleading representations perhaps

 

I've been reading and thinking more about my way forward. I'm also interested to learn more about how shares based investing can assist with my financial plans.

Now, I've never invested in shares outside of super, and I'll be speaking with my advisor and accountant about the options here but would love your ideas before I do this.

I have a Discretionary/Family Trust with around $100k of 'running losses' and significant 'capital losses' from my dud Gladstone properties. I understand there is a distinction between these two types of losses from a tax POV.

I'd like some kind of share based investment, where I can contribute monthly, that invests in some kind of low cost index fund (Aus/US/Int. shares) - be it an LIC, ETF, unsure what's available here.

I like the idea of owning the shares directly, rather than units in a trust - I know something like this exists but I don't know what it's called (something through Blackrock).

I would like this investment to pay an income to help with cashflow and pay down my debts (big negative equity loans from the Gladstone sales) and negative cashflow from properties.

Slowly seeing this balance increase will help me feel better about my situation, no matter how small it starts out.

Is there something like that I can invest in that will utilise these trapped losses in the trust?

 

Yes, but it will all depend on how it is structured and transacted now.

 

Tou may enjoy @Frank Manno thread on similar topic

 

Hi @Orion, wanted to ask if you've had any positive outcome proceeding with a sale? Or if there have been any others in the forum with their recent experience getting a sale?
I've made the first step & about to list my Melb townhouse, next step is letting go of this lemon.
I understand vacancy rates are back in the 2% range which surely must be a better sign for things improving. Cheers all

 

Hi - things have dragged on... the tenants were difficult and made it impossible to get tradies in to fix the place up a bit before the sale. I just issued a 60 day notice, so it should all happen from here on in.

Note - I'm not selling in Melb, but in Gladstone.

 

Cheers for the quick reply @Orion. Yes aware your selling in Gladstone, In a similar situation as I have a 2bd unit in Gladstone that's been nothing but a nightmare, bleeding funds & looking to take a 150k+ loss & offload. The Melb property I mentioned I'll sell so as to even out the loss & start fresh. Hoping to do it i the same financial year but nervous the Gladstone sales going through are all forced low offer sales. Goodluck with the tenants & the upcoming sale!

 

Yes, it's a gamble. I did try to sell 1-2 years ago with zero luck. 3 months vacancy... This is the 'better' property, so hopefully better luck.