Sell Non Performing IP in Launceston.

Hi Guys,

Just seeking some advice if I should sell or hold property IP in Launceston, Tasmania. I Currently have 3 IP's 1 in Logan, 1 in Broadmeadows and the 1 in Launceston, Tasmania. Originally purchased in Tas in 2007 for 150K current value 240K. I Used equity to purchase IP 2&3.

It's remained at 240K for about 5-6 years now and I believe it won't perform too well in the coming years. So question is should i sell it and purchase else where that will perform better or hold and wait?

Thanks

 

The danger is that you've held for 5-6 years through a flat period and may be selling just before a growth phase - which would really suck in retrospect. Is the Hobart boom likely to ripple out to Launceston?

 

Yes That is one consideration, I hope there is a ripple effect from Hobart. I'm from Tasmania and can't really see why anyone would be rushing in a Hurry to buy in launceston.

 

Previous Hobart booms have rippled to Launceston

We bought two properties around 18 months ago and paid the same or less than what their purchasers paid shortly after when you bought .

There is signs of life in the market . We've just bought one in Hobart but also looked at launnie again . Anything we thought was decent was selling fairly quickly .
If you look at the 10 year median in the investor section of re.com.au , you'll see prices peaked in 2011 , crashed the next year , then have trended up since then and are now at a new high .

There's no guarantees in any thing , but in your situation I'd be holding .

Cliff

 

Cheers for that Cliff. I bought at the right time back in 2007. Made some coin to finance IP 2&3. So hopefully you are right and we see some growth. Even another 50-60K would be nice over the next few years.

 

Sorry Brett, my crystal ball is broken so can't answer whether to sell or hold but I would pose a few questions to you. When you say it won't perform in the next few years are you only referring to capital growth? Is there any scope for the rental market to outperform other areas that you would otherwise invest this money in?
Is it costing you to hold or putting cash in your pocket?

 

But it's is difficult to get a loan, u sure u can get a new loan?

 

Haha, well you should get that one fixed mate. Yes Only referring to Capital growth. It pays for itself and covers rates/bill etc. I don't think the rents will go up too much more to give me flexibility to use the money else where. Getting $300 a week now.

 

C

So nett result is you are maybe up $2-$3k cashflow for the year after all is done with costs, adjustments, etc. Can you get this elsewhere by redeploying these funds into a different asset elsewhere? And as @Yson poses, are you still able to access funds in the current environment?
And yes have been trying to replace the crystal ball that has been in for repairs for about 6 years.

 

Yea mate I see what you are saying, think its best that I sit on this property for a bit longer. Seems like taking too much of a risk cutting it away. And I'm not familiar with any other asset classes to take the risk

 

Up to you @Brett1709 but if I was you, I'd keep the IP in Launceston and as you've mentioned that it's not costing you any money at the moment from keeping it. If it was costing you an arm and a leg in keeping it, better to cut your losses. I've been monitoring some of the properties in Launceston and some are selling pretty well like in West Launceston but some of the not so good ones that requires heaps of work are not.

This is my personal views only, but I think the game has changed somewhat and it's survival mode and retention for people. I'm still kicking and tossing on whether I can go for another IP or better to stay put for the time being.

 

You had a about 15% yearly growth from 2007 to 2011. Then followed by flat for about 6 years.
Is that how TAS work in general?

 

Sounds similar to most markets

Cliff

 

Yeah... That's my point too

 

I'm in Tassie next month. Both Hobart and Launceston. Not looking to buy but always interested in going for drives to look around in case I ever want to invest. What are some good areas for me to check out?

 

i'm from hobart, live in sydney now, but have invested in hobart. i do not know launnie all that well so won't comment there. hobart - blue chip areas are really getting expensive now (battery point, sandy bay, north hobart, west hobart). the areas getting better growth are next ring out - lenah valley, new town, mount stuart, north hobart, south hobart, bellerive, rosny, lindisfarne. very limited stock.

there are a couple of suburbs that were traditionally a bit rougher and had some housing commission, but are definitely worth considering given the recent growth - moonah, glenorchy, warrane and mornington. but you need to pick your street and make sure the neighbours aren't too rough.

 

i would hold for now. wait to see for at least a couple of years if the hobart boom spreads north. you'll be kicking yourself if it does and you had sold just prior to a boom.