Selling 2 of my IP's - looks like a loss is coming

Always darkest before dawn.
Hi Hardie. Just been catching up on this thread and reading great comments by others. I live and invest in Toowoomba region and I can tell you agents are selling almost everything they can get their hands on right now that is reasonable stock, and rental properties are in undersupply. First home owners and young people are buying into this market at present. It's usually a steady old market here 8 years out of 10 of course. They can seem to stagnate for quite a time and then ratchet up in a surprising way. eg My rental cottage was worth about $240k for about six years running after the 2011 floods then jumped up around $80k value in about a six month period a few years ago. I can sense a (smaller) rise coming in the next 18 months with these low interest rates. Wouldn't know covid existed in this part of the world except for writing your name down in a book at the cafes, and govts still throwing money around everywhere. Last person seen wearing a mask here was a bushranger 100 years ago. Can't get people to respond to job ads. Everyone employed or comfortable. Every tradie flat out keeping up with the building and reno grants. So it's not a mind blowing market by any means but not too bad either. I wouldn't race to buy here but nor would I rush to sell if I owned one here. Just wish we could score the rain that southern states have got.
There are always markets within markets of course. I can't say if you hang on for 12 months you will shoot the lights out but I am confident local rents will rise soon based on what I am seeing.
Good luck with whatever you choose to do mate.

 

I bought an IP in Toowoomba 3 years ago. At that time, the market was flat/depressed. We picked up a 4/1/1 house for around $30,000 less than valuation.

Our plan is to do a reno and convert it into 4/2/2. We are waiting for the market to show signs of life. Sounds like it might be time to put our reno hats on.

Thanks for your perspective on Toowoomba.

I thought Toowoomba property prices last peaked in 2012 and have been flat ever since (which is one reason for buying in 2017).

That is 8 years ago. Yep, time for prices to start moving. I would love to see a boom but I would take any price rise .

 

Cheers @kierank
SQM Research - Property - Residential Vacancy Rates - Toowoomba

Interesting to see that the Toowoomba vacancy rate is down below 1% for the first time since 2010. I don't generally expect much at all in the way of capital gains each year, but a minor uptick would be nice to supplement the okay yield in regional areas.
Actually the link to sqm research gives some very useful data for cities / regions Australia wide and the trend looks pretty good for many places that have been in the doldrums for a few years. Will be interesting to see how it all plays out in the next year or two. SEQ in general looks pretty good imho.

 

I've had poor performing properties (grow 40-50% over 6-7 years), but not loss making ones. I got rid of those poor performing ones because, like your scenario, couldn't much the upside, too much hassle (lots of minor repair, book keeping etc). My view is get rid of these useless properties asap if you're serious about wealth accumulation. Every year you delay is $ you could've put on something that will grow your wealth.

 

Hi all,

Hope everyone is doing well!

Been catching up on posts here and really appreciate all the great insights.

Just to keep everyone in the loop - I sold the investment in Toowoomba. If I didn't pay LMI on the property twice (yes, TWICE) - I would have broken even on the investment. I know some of you asking why on earth I would go LMI twice... which is a fair question. Reason being, I refinanced on a cheaper rate and the strategy at the time was to buy and hold so eventually the LMI would have been absorbed into CG's - if there were any. I ran the risk in hope of sunny days and large CG's.

Anyways, peace of mind is now with me. I owe the bank some $$$ in my loss, but i'm ok with it. Once I clear out the debt ill go again. Thinking of having a hand in the commercial market now. Reading a lot about it recently - getting very interested. Haven't started reading on the forum yet, but that is my next step.

 

Given the direction the market is going, would be interesting to look back on this in 3-5 years.

think strategically about that lmi twice thing. Did you do the numbers? If it was to free up equity to buy something else, or solely for a lower rate? How much lower, compared to how much lmi was?

 

It was for the lower rate. I did crunch the numbers and it did work out in my favour if I was to hold onto the property and let it mature (both in property value and loan).

 

According to Michael Yardney, only 2% properties are "investment grade" (of course he would say that ?!). Buy & hold IPs is a hard long slog, many "blue chip sure bet capital growth" suburbs the rent yield only 2-3% GROSS !

 

I believe the “boom wave” that is pounding Brisbane at the moment will reach Toowoomba in the next 12 months to 2 years.

I am monitoring Toowoomba at the moment to determine when to pull the trigger.

I would like to reno my IP prior to selling but I may not have time before the wave hits.

Time will tell.

 

I am interested in the whole Brisbane boom at the moment. I see there is a fairly lengthy thread on it. Before setting some time to go through it - what's everyone's thoughts on the Ipswitch market now? I have an offer which I am possibly going to take. Has me wearing a loss of 10k on it. My strategy is still the same as before, however I wonder, do I pay off some debt and turn the IP positive. And then pray to the investment gods the capital gains are there in a few more years time?

 

I'm not sure when you bought in or the entire story but how on earth are you copping losses these days? Even Ipswich is moving up in price. No idea about Toowoomba.

Did you initially buy a new build or overpay or something?

In this market I dont know a single person copping any kind of loss who is currently selling or has sold recently.

 

Most of the info is in the thread.

FYI - I make money on the property when selling. It's the agent fees and conveyancing which will put me in the red.

 

We have three in the ipswich area

market has moved in the last months and I expect it to continue

IMHO , now is a good time to BUY in ipswich not sell .

won’t be surprised to see the market double in the next 2-4 years.

cliff

 

What area are you in Cliff?

 

Lower end

cliff

 

Raceview itty bitty 4/2/2 were selling around $310k now $330k+ 1 year later. Say 7% increase at the start of the price movements

 

Toowoomba is a place I invest in for rental yield. Not capital gains.

If you are chasing capital gains, pick a capital city. You are more likely to see gains there.
The recent pick up in the market in Toowoomba has been nice. But I wouldn't expect it to last or increase too much more. It will be followed by a significant period of no growth, IMHO. Incomes in the region can only support so much.
And the capital gains in Toowoomba has been nothing compared to the increase I've had down in Canberra.

 

https://www.urban.com.au/expert-ins...among-australias-property-markets-terry-ryder

Check out what terry ryder has to say on ipswich

The BIG improver ...

cliff

 

Have a look at the last boom in greater Brisbane before you make a decision. The ripple usually goes Brisbane Logan then out to Ipswich...as suggested the growth is likely only getting started.

 

Hi all, has anyone recently seen the prices increase in Ipswich? Is the Logan boom having an positive effect on Ipswich?