Pointless IP - how to proceed

Hello,

Just after some advice as to how to proceed with our situation as it's starting to stress me out as it's a bit of a catch 22 scenario. We have an IP in Wagga (Ashmont) and it has been vacant for 2.5 months.

On the 21st of this month, our insurance will cease to cover the house for fire and a few other things due to unoccupancy. I am worried about this as it's a low socio-economic area where vandalism and the like isn't exactly unheard of.

Prior to the vacancy, we had excellent tenants who paid on time, kept the place well and even did work on it for free. They left due to security concerns after the house was broken into. Since then, we've only had one person inspect it who was very unsuitable and a couple of emails through Gumtree but most didn't seem like serious queries - just time wasters. It is a 4 bedroom house and it is among the cheapest couple of houses online. We are even offering one month free rent as well. From what I've heard from various REAs, it is a very slow period in the area but I still expected to find a tenant within 3 months. The area just seems to be performing worse and worse.

To further complicate this issue, my husband lost his job a few months back so we've had a significant drop in income (we didn't have a particularly huge income to begin with). My income is fine for covering our PPOR mortgage, other debts and living expenses but it's getting very annoying putting some of our limited money into this property that just seems to be getting nowhere. I considered selling it but it would be at a loss and I really don't want/need any additional debt right now, especially since it would no longer be tied to anything, so money for nothing really.

Not sure what replies I'm expecting but just wanted to put it out there in case any of you had some bright ideas.

Thanks

 

Guess you have two options.
Sell or get someone in there.

Even dropping 50 a week you'll loose less than having it vacant for another 2 months. You can do a six month lease and start raising it then.

 

We have dropped from $250/week to $200/week and now with the month free, it's effectively $185/week which is comparable to (and cheaper than many) units in the area and the 2nd cheapest property in the enitre suburb online. I'm happy to drop the rent if it'd work but I'm thinking it's a more bigger issue than just the cost. Surely we would've had more people inspect it or enquire by now? It's a largely investor area so even selling it will be difficult as it's vacant

 

Can you address the security issues so the property cannot be broken into?
Perhaps change PM's to someone a bit more proactive?
Post the advert here for us to have a look at and make suggestions for improvement.

 

We can't change the property manager as most don't want to take on additional properties. I tried a while back and didn't have any luck.

The break in seemed more opportunistic as the tenants were a bit lax about it themselves. I will post the ad shortly.

 

As propertunity suggested have you looked at back to base alarms? We were going to get it for our ppor from memory I think the best we found was about $36 a month which included window monitors, sensors and the back to base people. Might help sway over some tenants or scare away arsonists

 

Is the $360 for the actual equipment and monitoring as well?

 

No it was $34per month, its like renting their sensors/equipment but if they do pick up someone breaking in they notify the police for you. You have to sign up for a year though. It would be tax deductible as well

 

Its called back to base alarms not sure about the wagga region I'm sure they would have something similar around the same price point

 

Sorry, weird typo!

 

Hate to say it Cimbom, but I personally would bite the bullet and sell the thing (quickly, if the area is dodgy).

2.5 month vacancies are possible even in capital cities but more rife in regional towns. That's why as a rule, I stay away from them - because they're good when they're good, but generally don't have the same consistency, drivers and desirability as cap cities.

Ashmont may have its day in the sun, but how long do you think you'll have to wait for a $50K-100K capital gain, and in meantime, endure the stress you're going through and may go through again if/when future tenants leave.

 

Sorry to hear that yours still having a hard time of it there. I spoke to my PM yesterday who said that breakins are way up at the moment and vacancies are pretty high. Winter time is always very tough to find tenants down there regardless of the crime rate.

How much would you lose if you did sell? I took a 20k loss on a terrible property a few years back and while we are still paying that 20k off via a different property it was worth the stress reduction.

Have you put a for sale ad on Gumtree? Some property spruikers encourage students to look at those sorts of sites for cash flow positive properties. It sounds awful but its probably the best way to pass it on to a sucker who is drawn by the potential cash flow rather than researching the demographics. That will be my strategy when I sell.

 

If you can afford to, I'd drop the rent to $185 per week without the free month. If it still ends up the same in your pocket, offer a 6 month lease and then see how the market is coming into autumn.

 

Yeah same - I'm not a big fan of weeks or months for free in lieu of just lowering the asking rent.

 

I'll give the PM a call tomorrow to discuss. I don't mind lowering the price but just thought $200/week (with a free month) would look better from a marketing/selling perspective if I list it for sale after getting tenants in, as it's a largely investor area with owners chasing high yields.

If we listed it for sale, we'd probably lose about 20k after all costs. I might wear it if we didn't have any other debts but we have a similar amount of non-deductible debt that I'm keen on getting rid of asap so would really want to avoid adding to that.

 

Box of matches?

Na i agree with above. I'd go for the $190 a week

 

Had a look on Domain and guessing which one is yours...

More photos perhaps (if I've guessed correctly). The one I was looking at needed better images.

There are a lot of cheap houses in the 3 bedroom range though, both for rent and to buy. At current rates buying would be cheaper sometimes. I guess the big question is how long you can sustain having it empty before you must sell it?

It's going to be hard to compete with the 3-bedroom places that can be quite cheap. Four bedrooms can just be extra space to clean.

Have you been watching Domain rentals to see how many are on the market in a given week and how many new properties add per week? If the rate is really low perhaps it's a slow area and you're competing for those ten tenants a week who are moving. If so, maybe selling, taking the loss and moving on is the best.

 

I believe @beachgurl knows a thing or two about the market in ashmont ( I think ). Will likely have some insight.

 

I have received a couple of emails through Gumtree over the weekend so I'm hoping our luck is about to turn. One of the emails in particular seemed promising - fingers crossed. I didn't have a chance to contact the PM to drop the rent on Friday but will do this in a few days if the current queries don't eventuate into anything.

In terms of security, i was thinking of installing a security camera system instead of an alarm as it's a one off payment rather than an ongoing commitment. Would these have the same impact?