North Haven SA: Hold, Sell, Subdivide?

Hi all,
We are about to return from overseas and purchase out first family home on the Central Coast in Sydney (wife's work-long story). I have an investment property in North Haven and have had suggestions to sell it to consolidate $$$ to minimise family mortgage moving forwards.

House: (Rofe Court, North Haven)
- Solid, built late 70's, 4 b/r, in ok/fine condition (is rented to happy tenants @ $320p/w)
- 950m2 (BIG) square block in cul-de-sac.

I bought it (for too much) in 2008 for 350K.
Recent valuation (by agent who has been managing rental) is 380-400K
We have 250K in cash in anticipation of buying house - but could use to sub divide if this is a better capital gain option.

Assuming it sold for 380-390K, I've basically made exactly "0" in 8 years (after all the buy/sell fees)

Options:
- Just sell it, move on
- Hold
- Engage builder/real estate agent and sell Home/Land package
- Do the full sub division

Would love to hear some thoughts as we have been away in France the last 4 years (wife's work-another long story) so are completely out of the loop.

Many thanks
Steve

 

Hi Steve
Property investment is long term so the longer you hold it the better.

Also the more value add the better too, renovation, subdivision etc...

If you just sell it at zero net gain in present time you will miss out on any future capital growth of that property.

However what you do would depend on your own current financial circumstances and not one way is better than any other way.

It would take time effort and money to redevelop or subdivide the property and whether that is achievable would depend on your own circumstances.

Obviously best scenario would be to do the full redevelopment and hold all properties.

Adelaide is gaining some interest at the moment from interstate investors and is experiencing a bit of a growth phase in the property market. In any case my view is to hold for as long as you can if you can.

Hope that helps

 

Agree, hold for a few more years. Adelaide is starting an upwards price trend, so selling at the start of this would not be wise unless you really need the cash released to do something else.

 

Any chance of raising the rent? $320 a week seems very low for a 4 bedroom house in North Haven. I'd hold the property for now.

 

I would sell, while there is still someone who is willing to buy. Dew to changing economical conditions to the worst this luxury of having a buyer might change. I would have sold mine tomorrow but unfortunately I live in it and have to wait till the end of the year.

 

Thanks for your thoughts Xenia. The full redevelop may be an option at some point. It is a large (950m) block. My basic math on this, IF we considered this in current conditions, is 500K to build 2x houses (4bd/2bth) on subdivision + 50K "miscellaneous". These could sell theoretically for 500-550K each. Assume 380K original purchase price (with fees etc), So, $1,050,000- (550K+380K) = 120K in front....if i did/could sell them.

Or, as you said, build and hold onto them....

Also helpful DaveM. Many thanks. We don;t "need" the money in it. And if there is no real money tied up in it then maybe it is indeed worth just sitting....as some of the other helpful folks on here have suggested...

An interesting point "2FAST". They are great tenants but have only been in there about 12 months. BUT maybe time to bump it a little....I will discuss this with the managing agent. Thanks!

Thanks barnes. 3 say "Hold" and you are presenting the "sell"....probably where my head is more at before reading these posts - i.e. To use the (tiny) $$$ to minimise mortgage for our upcoming family home purchase - at some point). BUT, we have ample deposit to get a place so selling is not a necessity. Just thought it might be better to consolidate things.

 

By the way, THANK YOU everyone for taking the time to put in your 2 cents. It really is tremendously helpful.

 

Of course the perma bear would say sell.

Best bet is to try and improve the return on it to make it easier to hold onto. Revisit the numbers on redevelopment in a few years.

 

Buy in gloom, sell in boom - most commentators are either positive or bullish on Adelaide at this time.

 

You are correct. When most are bullish it's the BEST time to sell. You can even get the exact top.

 

wow Adelaide is topping out already? Lol