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Seeking advices on investment property in Docklands VIC

Discussion in 'Property Management' started by Clairal, 3rd Dec, 2015.

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Should I hold an investment property in Docklands

  1. See it now and take the loss

    3 vote(s)
    60.0%
  2. Try to hold it hoping it'll make money in a long run

    2 vote(s)
    40.0%
  1. Clairal

    Clairal Member

    Joined:
    3rd Dec, 2015
    Posts:
    19
    Location:
    Brisbane
    Hi all,

    I purchased an off-the-plan apartment (2/1/1) in Docklands two years ago and now it's due settlement early next year. It turns out people are selling below the purchased price and I'm wondering what's the right thing to do:
    1. Sell it now, take the 30k loss or more and put the money somewhere else.
    2. Try to rent it out. With the over-supply of apartments in Docklands it may be hard to rent out and it can take quite a few years before it starts to rise in value. At the meantime I might need to pay extra each week trying to hold it.

    Could you please share some ideas/insight on this? Appreciate your help!
    Cheers
     
  2. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,546
    Location:
    Melbourne, Australia
    Hi Clairal,

    It appears a damned if you do and damned if you don't situations.

    If you could move into it and rent out your current home that is another option.

    Selling cons;
    Selling with everyone else at a loss
    Selling agents fees
    Having to pay stamp duty

    This is a big hole to fill

    However if you utilse the money elsewhere you still need to pay stamp duty again so you would need to get a fair bit of growth for it to be good.

    Renting it - well huge amount of apartments are coming online and even in the same building and you will be competing with the overseas investor who has most likely deeper pockets. This means even less rent for your unit and more out of pocket. For the property to grow anytime soon I cannot foresee it as there are x,000s of units coming on the market in docklands and melb cbd in the next couple of years.

    For myself my strategy is buy and hold but not purchasing OTP and houses (not units). So sorry but I cannot give you what I would do but I hope it helps :).

    Good luck and you will make the right call :)
     
  3. melbournian

    melbournian Well-Known Member

    Joined:
    2nd Sep, 2015
    Posts:
    1,311
    Location:
    melbourne
    Renting it out in docklands or CBD for standard rental returns shouldn't be an issue. One bedders go for like 400 per week as they're close to southern cross station.

    Turn a negative into a positive by furnishing the place for short lease accommodation through Airbnb hence u could consider the extra returns as growth. As for apts and unit don't be too stressed abt it I can tell u that my Doncaster unit which I sold outperformed 4 X point cook houses in growth alone

    Check www.hostkeep.com.au if u are not in Melbourne. They essentially do the whole process for u.
     
    Last edited: 3rd Dec, 2015
  4. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    120
    Location:
    Melbourne
    There will not be any capital growth for a long time.

    Leasing may help you break even on holding costs, but there is little benefit in holding onto an asset that will (probably) drop in value. Airbnb is a good way to increase the rental, but it requires more active management and the strata may give you hassles about the property usage.

    IMHO realise the loss and invest in something that that won't burden your finances. With all the 'doom and gloom' talk that is emerging, you may even be able to snap up a bargain if you look hard enough.
     
  5. Clairal

    Clairal Member

    Joined:
    3rd Dec, 2015
    Posts:
    19
    Location:
    Brisbane
    Thanks for the input guys. The bank came back with an evaluation 50k lower than the purchase price. So if I wanna get it settled will need to pay 50k more deposit.
    Someone recommended vender finance or rent to buy. But it looks like there's a lot of hassle in finance and legislation. Anyone has experience for that? Any comments welcome. Thanks!
     
  6. CosmicTrevor

    CosmicTrevor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    117
    Location:
    Sydney
    If bank val is $50k lower you have to fund a % of the difference not the whole amount. In other words, if price was $500k, val $450k and assuming a 80% LVR you will only be able to borrow 80% of $450k or $360k. You would have done your sums on 80% of $500k, so you would have expected to borrow $400k. So the shortfall is $400k-$360k=$40k. So at settlement lender contributes $360k and you contribute $140k (instead of $400k and $100k). Don't forget about stamp duty as well.

    $40k is a large wad of cash, but less than $50k.

    Try another lender?

    Its a big call to take the loss now by basically walking away from the contract and forfeiting your deposit (there may be other penalties as well - depends on the contract).

    Have you worked out your breakeven on rent and checked if this is feasible for the area? Can you find the extra $ needed at settlement?