Perth Values & Rents rising - Should I wait 12 months to sell?

I keep hearing that Perth Rents and Values are on the rise and I'm starting to wonder if I'd be better off pulling my unit off the market and waiting 12 months to sell.

I have an one bed inner city.

My contract with the REAgent ends in May, the current tenant moves out March 1st.

I'm wondering just how fast the recovery will be though and whether it would be a gamble to try selling in 1 years time when hopefully market sentiment has changed.

I've been eating into my savings the last year with the NG as rents dropped. I have $15k in savings. I wonder if this will be enough to get me through another year. I'll get back $7 in my tax return so that'll help.

Mum had told me also that she can give me a couple of thousand to get me through if I need it. So I have some back up.

Some background info

My 3x2 villa is leased for $290 PW on a $350k loan

My unit I'm selling is leased for $190 on a $177k loan

The unit I'm living in im paying $750 per month mortgage

My salary is $68k pa gross

Can I tear up the agreement with my RE agent ? Is it too late ?

If I sell It'll be less than what I paid for it. But I do have equity in it as I got a nice cash deposit on it.

What would you do ?

Do you think I can hang on longer ?

Do you think the Perth market be any better in a years time ?

It'd kill me if in a year I found out I could get more money for it! It'd also kill me though if I find I'm not able to stay afloat but maybe I can...


Thanks

 

How much have you claimed on depreciation for the property? Did you consider that amount when working out your loss?

 

Not that much in depreciation. Only the kitchen is renovated 10 years ago.

 

Hi. I need help please

Bump


Not sure what to do.

All I know is if I know I can hang on financially for another 12 months before selling I think I'd be silly not to. But I'd be taking a gamble though on Perth prices rising. It could be a good gamble.

 

Imo you're looking at it wrongly. If you've got a lot of equity there look at it not from a point of view of will I get more in 12 months but instead consider "how much more value can I get now if I liquidate all my vanilla investments and use these historic lows to upgrade significantly"

If you do it correctly the gains see will be exponentially higher than any gains you would give up on the existing properties imo

That being said though, as the recovery continues and in particular is stronger in those upgrade homes than it is in the properties you would need to sell, the gap in price will grow. Where you could maybe sell up now and from leftover funds + serviceable mortgage be able to afford a property, in 12 months you might maybe see 50k extra in sales of your stock but the corresponding upgrade may be 100k or 150k more and no longer attainable

 

Maybe this is a question that people can't answer. No one knows what will happen to property prices in Perth in the next 12 months. They could go down, could go up, could go sideways. Who knows?

And what about this? You wait 12 months but property prices are trending up. You decide to wait 12 months to sell. You wait 12 months but property prices are trending up. You decide to wait 12 months to sell. You wait 12 months but property prices are trending up. You decide to wait 12 months to sell. You find you missed the peak. You regret not selling 12 months ago. Now what do you do? Sell or wait?

It is an unanswerable question.

 

Adding to my post above, I believe many are silly not to use the opportunity to sell up and upgrade because often the upgrade opportunities are a 2 or3 step up Vs the usual next leg up scenario

 

I would sell. It's probably time to sell when you are thinking of relying on your mother instead! Yes, it might go up but better to sell when you can without too much pressure. Not enough of a buffer for my liking. Sell while you can.

 

Thanks so much for your reply sanj.

Yeah I have a bit of equity. I reduced the asking and If I get at least the asking amount I'll come away with $52,000 so at least it's something.

Yeah I see what your getting at. I'll see more growth from my upgrade villa in the years to come compared to my 1 bed. Thanks for that reminder! And it's a great time to upgrade the way things are in Perth (if I can afford it)

I was originally thinking of upgrading to a ppor villa but I'd be better off buying it as an ip as I don't won't a bigger ppor mortgage. But I wouldn't be able to afford to keep all 3 properties if I upgraded to a villa and if I sold my ppor that I'm in right now I'd lose money on it.

I could always buy the upgrade ppor make it an IP for a year or so if the banks let me buy it) and then sell my current ppor move into it. This way I wouldn't be making a loss on my ppor.

 

Yeah because there is this villa in a very nice suburb asking just $250k. It's like $70 k down on previous years. This sort of property in that street and location historically sees good growth! Yep I think your right.


I'm booking an appointment to see my MB.

 

Yeah true. Who knows what's gonna happen. It'd be a gamble and in the meantime I've let the opportunity of upgrading slip through my fingers... Missing the boat

 

I played the same hold/sell game in Melbourne. I manged to sell after good profits but before the peak. Selling at that time let me move forward on 2 projects. So while I did not extract maximum profit from one deal, I am adding value on 2 properties instead. I am comfortable with my decision

 

Cool. Worked well for you. I guess we just have to look at the bigger picture hey!! Like you said you didn't make as much of a profit as you'd hoped but you ended up the winner!

Hahaha poor mum I keep coming up with different ideas. One min I'm gonna rentvest, the next min I'm gonna stick with and live in my small ppor and save save save, the next minute I'm gonna upgrade. But like I explained to mum it's good to have so many options!! Most Aussies don't!! Lots are poor and arnt in the good position I'm in.

Looking forward to seeing my mortgage broker so we can work through some scenarios

 

I still don't like the idea that I'll have a bigger ppor mortgage though. But I could always sell off a property down the track to pay it off. It'd be a $250-270 loan.

Also I don't mind working till I'm in my 60's so I'm in no hurry to retire. I wouldn't mind going part time though early 60's if I can. I'm 45 so I've got another couple of property cycles I'm hoping.

The other option is i could always rentvest until it's more affordable to move into my new upgrade ppor.

 

With the high transactional costs here, it would only be worthwhile doig the exercise if the upgrade achieved was sufficient enough to justify the stamps plus selling fees etc and you won't get that at a 400k purchaw imo

 

Try doing airbnb? Leasing out rooms in your ppor to stay afloat while you make that call.

While it’s also an opportunity, as @sanj and @Perthguy pointed out, the one thing you have right now is control on how long it takes to sell.. if you have some buffer you can stick to your sale price. 12 months down you might want a quicker sale on with a more compromised financial position.

 

yeah, hmmmm. Since yesterday I've been having second thoughts again about making the new property my upgraded ppor. Its gonna put me in too much debt and I dont want a big PPOR loan. Plus my 3 x 2 villa has lost $20K in value since I purchased it, and I'd be lucky to break even and not lose money on my 1 bed ppor.

Maybe what I should do is just consider the 2014 purchase of my IP 3 x 2 villa my upgrade house. Its my IP but I can consider it my upgrade house (even though I don't live in it as a ppor) as it was worth a lot more than my two 1 beds.

Anyhow i'll be seeing my MB on Thursday to have a chat about my options. It might be best for me to just stay put in my little PPOR unit with my small mortgage and save money. Then in time when both properties rise in value and I've saved more cash I could look at buying another IP.

 

I think financially I'm better off to just stay put in my ppor and then I'll have more available funds to invest. If I'm tied down with ppor debt then it will impact on my investing.

If i'm keen to live in a villa with courtyard there is always the option of renting and I could put my $65,000 cash savings against my old PPOR (turn it into an IP) But in the meantime just save until I've had enough of living there.