Pulling property from sale - long-term wait for recovery?

Discussion in 'Investment Strategy' started by doublebrick, 31st Mar, 2020.

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  1. doublebrick

    doublebrick Well-Known Member

    Joined:
    14th Oct, 2018
    Posts:
    65
    Location:
    Sydney
    Hi all, interested to know for those investors who have pulled their IP from sale, I assume you have big enough buffer to account for tenant default or a stable income? Even if you withdraw and rent it back out, you still need to account for the new (NSW) tenancy laws and 6mth eviction freeze right? What if you delay for a year, things get worse and you are then forced to sell? The economy doesn’t seem to be going back up anytime soon.

    My IP is currently listed (owned it for 5 yrs, inner west Sydney) and I was expecting to sell in an up market couple of months ago - I didn’t *have* to sell but wanted to reduce my debt and have a bigger buffer. It’s my best asset being a townhouse (others are smaller units) , but the most highly geared IP I have, about 85%LVR so repayments are highest and also with $6k of land tax pa. And I would barely cover all the costs over the 5 yrs with the expected selling price now. Of course I know it’s not wise to sell in a down market, property is a long term play and I have a stable job that could tie things over but if my other tenants for other IPs all claim covid hardship, then in the short term, *I’m* the one who’s going to be in hardship too (my other IPs are slightly positive geared and I don’t want to lose them). So my thinking is sell one IP to safeguard the others and have more peace of mind. Also I’m thinking of using the proceeds to do a monthly invest in the equities index so at least I can catch any future rebound without the risks of leverage and tenancy default.

    So interested to know people’s risk tolerance when deciding to sell or keep when either option has risks? And how much buffer do you need for say $2m of IP debt? My inclination is to continue with the sale (and live with potential seller’s regret but have less worry), but interested in how others are dealing with the current situation.
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    3,472
    Location:
    NSW
    Personally I’m not selling anything. My view is that the virus thing will be over in about 4 months. Then economy is rebooted taking about 2 months to come back online. Total of 6 months. This time we’re in now will be looked back upon as a “buying opportunity”.

    Buffers in place for 6 months of no income- up from 3 months normally. Insurances all in place.

    Looking for opportunities as they arise. Enjoying the time and planning the next holiday.
     
    Jmillar, BuyersAgent, Jacque and 2 others like this.
  3. Lacrim

    Lacrim Well-Known Member

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    25th Jul, 2015
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    4,136
    Location:
    Australia
    What's this new ruling about no going out for a 'reasonable excuse' going to do to inspections of any sort - rental and purchase? Reckon the Govt's gone too far. I can understand banning socialising etc in this time but...
     
  4. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    3,472
    Location:
    NSW
    Well if you don’t like this (Stage 3)you’re going to hate Stage 4 restrictions. :)
     
  5. jaydee

    jaydee Well-Known Member

    Joined:
    25th Mar, 2016
    Posts:
    190
    Location:
    Perth
    I have a rental property in WA (Leederville) that is being vacated this week which I have re-advertised for Lease. In parallel, I have engaged a REA for a short period to try to sell the property via their client database (ie. no advertising or marketing campaign).

    TBH, I would be very surprised if I do get a purchase offer but given the current state of affairs it is worth trying (as there is no cost to me).

    The good thing is, whilst the property is not yet vacated, I have had 3 enquiries from renters wanting to view the property next week, so hopefully all good whatever happens........
     
    doublebrick likes this.
  6. Sackie

    Sackie Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    18,240
    Location:
    Bondi Beach
    I would have preferred going from stage 0 to stage total lockdown f*****. Give massive stimulus in the process. Get it over and done with sooner with less chaos and damage. Then be back up and running.

    This drip, drip drip is total BS.
     
    mikey7 and matt_j like this.