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Rent while selling? Perth

Discussion in 'The Buying & Selling Process' started by goponcho, 13th Oct, 2015.

  1. goponcho

    goponcho Member

    Joined:
    24th Jun, 2015
    Posts:
    8
    Location:
    Perth
    Hi,

    Am trying to sell my first investment property about two years in. Negative cash flow property, but feel like I made a miscalculation in that it is a property with a few things like liveable but small interior, block shape and survey strata with common wall which affect demand and make me not want to hold it long term, for the capital appreciation it needs to make it profitable.

    Has been unrented and on the selling market for about 3 months with not much interest or offers for purchase. The price is in a vague range mid 00s.

    Has not been for rent for last few months. Does putting it up for rent as well as sale significantly affect the likelihood of a sale? In a family neighbourhood with demand for schools and so yearly contracts often.

    Could drop the price, but then i think the yield would be sufficient....to hope for capital gains. Unsure :(
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,756
    Location:
    Perth WA
    Putting it up for rent and sale at the same time isn't a great idea for a couple of reasons - first you knock out all the owner-occupier buyers once you have a tenant, PLUS, no tenant in their right mind wants to rent a house that's for sale.

    I'd do one or the other.

    Can you rent it out and address the neg cashflow, either by negotiating rates/refinancing, or adding some value that will increase rent?
     
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  3. House

    House Well-Known Member Premium Member

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    13th Sep, 2015
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    767
    Location:
    Sydney
    I'll take it off your hands, right in my price range :D

    How negative is the cashflow? Is there much equity in it? The more figures you provide, he more solutions and suggestions can be provided ;)

    Personally I wouldn't do both at the same time mainly because it's easier to sell without tenants but I'd definitely try hold onto it if at all possible given the buying and selling costs involved.
     
    goponcho likes this.
  4. goponcho

    goponcho Member

    Joined:
    24th Jun, 2015
    Posts:
    8
    Location:
    Perth
    Its just under $7k loss after costs, depreciation and tax credit. There's 10% equity in it.
    So really needs about 1.5% capital growth pa for it to break even from this point forward, including capital gains discount for holding >12mo.


    Doesn't seem like a huge lot of cap growth to hope for, the cash flow leak in itself is easily manageable in our circumstances.

    Other thing is becomes quite a bit harder to rent out after school year begins.

    Interest rates are pretty low renegotiated them recently, and its an older house so not wanting to put a lot of work into it, most of the value if from the land

    Thanks for the feedback about it being difficult to sell when rented. Just worrying without much interest in the property. Could alternatively rent out and try to sell towards end of next year while rented but near end of lease.
     
    Last edited: 13th Oct, 2015
    Perthguy likes this.