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Sell or hold - stuck on next move

Discussion in 'General Property Chat' started by Ems, 1st Dec, 2015.

  1. Ems

    Ems Active Member

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    Just looking at what peoples views are on the future of Gladstone? We purchased 2 properties there back in 2010/2011 at the top of the market. Since then we have seen price falls as well as rents. We are currently out of pocket over $20k a year and wondering if we should just cut our loses and sell. We can afford to hold (Just) but I myself can't see Gladstone picking up for a good few years, in the meantime stopping us progressing with our goals. If we do sell we will be looking at considerable losses but holding could mean years lost and even more money. I just don't know what to do. I know you can't tell us what to do but I'm just looking for experienced people's opinions. Have you bought a lemon and then sold for a loss or held on until it picks up?
     
  2. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hello EMS,

    Some time these things happen :(. Unfortunately apart from the yearly loss occurring what about future capital losses? Talk to your accountant and mortgage broker and maybe look at a exit strategy. Most successful investors have had a lemon.

    I my self have never had a lemon investment property but I did buy a lemon business where with a bit of hard work i was able to turn into a nice business.

    As long as you learn from this, things will only get better.
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    I think for IPs in mining towns the news for the next few years is not looking good.:(
    I'd sell (if you can find a buyer) and learn your lesson and don't do that again.:cool:
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    HI Ems, sometimes cutting those things free is the best thing to do just to release the weight from your shoulders.

    Just not having to think about the "will it, won't it, what should I do?" can free up your head space for whatever comes next.

    You could also just sell one to reduce your exposure.
     
  5. monalisa

    monalisa Well-Known Member Premium Member

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    this....... "holding could mean years lost and even more money."

    Have you looked into how you will fund the shortfalls

    Need to consider, what if the values and rents fall further? Better to get some $ then none at all.
     
    Xenia likes this.
  6. bob shovel

    bob shovel Well-Known Member

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    This could be the happy medium.

    Gladstone isn't a "mining town ", there is another Gladstone thread going and although the crazy days are gone is not all doom and gloom,just don't expect them to ramp up construction again like 2009! It will sit flat for a while yet. (seek advice as mentioned)
    They are pushing tourism and as a town has a number of stable industries. Big re development of the shopping centre is planned next year, pre works underway now.

    If selling you'll be most likely attracting first home buyers or locals so make the prop appeal to locals before selling
     
    HUGH72 likes this.
  7. MsAli

    MsAli Well-Known Member Premium Member

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    You seem to have answered your own question. It's opportunity cost. Painful, yes. As you say, sometimes it's better to cut losses so you can progress with your goals
     
    Xenia likes this.
  8. Ems

    Ems Active Member

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    Thanks everyone.

    One is on a fixed loan but we are considering selling the other. I will contact my accountant/broker and try and sort this mess out.
     
  9. jins13

    jins13 Well-Known Member

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    Hope everything works out well for you and it reduces your stress and worries.
     
  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Good luck - let us know how it turns out for you.
     
  11. Chilliblue

    Chilliblue Well-Known Member

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    @Ems you appear to be ahead by pondering the decision rather than burying your head in the sand. Might be worth talking to a financial planner to better understand your financial position and consider their advice along with what you already know about the market.

    Best of luck.
     
  12. Ems

    Ems Active Member

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    I've spoken to my real estate agent who knows the house after looking after it for the past 5 years and she is saying we would be looking at a sale price of around $250k - we paid $350k in 2010.

    We have DA approval for 4 3 bed townhouses but our agent is saying there are no developers looking to build at the moment so would need to market the property to FHB's.

    The current loan is $320k so looking at a minimum of $70k shortfall which we can't afford to pay out the loan. It looks like we will need to hold on to this one..
     
  13. bob shovel

    bob shovel Well-Known Member

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    What about the other one? Similar story?

    Development blocks won't be needed for a while with the current oversupply, but long term could be handy
     
  14. Ems

    Ems Active Member

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    The other is on a fixed loan for another year so can't really sell that due to the high exit fees.
     
  15. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Ouch! But on the bright side, if you sell you will have a sizeable loss you can carry forward and when you eventually make a capital gain elsewhere, you might not have to pay any CGT on that....
     
  16. the world is your oyster

    the world is your oyster Well-Known Member

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    Hi ems

    I'm in the same boat I bought in 2012 for 414k if sold today Iam looking at $320k so after selling costs 310k
    Because I bought at 414k loans are as follow :
    360 k main loan
    55 k LOC used for deposit and fund holding cost
    40k Kon to reduce my lvr

    I now owe 455k on a 320 k investment so that's a massive loss I also in very high negative cashflow territory that's draining me

    I had no Tennent for 3.5 weeks just before Christmas me and my partner were very keen to just sell and move on one day I spoke to the rental agent and said if u find someone sign them in there , the next day I called the selling agent I have been talking with and said lets go ahead and market the property she called and arranged photos etc. I got of phone to selling agent and sent a email to rental agent we send a email at the exact same time and her response was with a signed 6 month lease at $250 pw so I can't sell until June now but i am very keen to let this go and move on

    Fortunately for me I have another property where that value is 225k and loan of 70k

    So total would look like this

    225k Melb
    320k qld
    545 k

    -360k
    -40k
    -55k
    -70k
    525k

    So once I sold everything and paid costs and holding costs I would not have a big Kon and no property but I'm sure I can recover from this by doing what I done the first time if you want to have a chat I'm happy to have a chat with you

    Daniel
     
  17. Marg4000

    Marg4000 Well-Known Member

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    If you are receiving $250 a week rent, a selling price of $320K seems optomistic.
    Marg
     
  18. the world is your oyster

    the world is your oyster Well-Known Member

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    its better then nothing marg
    just sad I 3 weeks befoure it was 330 and I was led to believe it would have been $500 pw
    a lesson to be learnt here to fellow investors
    - if you buy a OF THE PLAN house and land from a selling company I would strongly suggest you get it in writing a rental agreement with the amount there advertising if the wont there not confident anyway so run away .... but guys do research research and research not everybody can be trusted and calling agents and getting a feel for the town would help so much , had I done that I wouldn't have bought what I did
     
  19. Ems

    Ems Active Member

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    We will need to continue to hold both our properties in Gladstone. We can't afford the losses that both will produce if sold. This will put us back years and I have no idea when (and if) things will turn around. A very important (and costly) lesson we have learnt here.

    Wow I'm glad we have seen the end of 2015, it sucked immensely.
     
  20. MTR

    MTR Well-Known Member Premium Member

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    A long shot but can you develop or do something with the property to add value, additional income?

    Personally, I would sell at least one property and reduce the risk. The longer you hold with income losses means you are missing out on other opportunities where you can make money.

    Also not an accountant but you can offset losses in the future with CG ? not sure of rules etc. but just another thought that may reduce the pain.

    Angel recently sold in Gladstone, big weight off her shoulder. Stress is not good, so another thing to consider, your health.

    Marisa:)
     
    Last edited: 9th Jan, 2016