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Selling/keeping property dilemma

Discussion in 'The Buying & Selling Process' started by paulF, 9th Jun, 2016.

  1. paulF

    paulF Well-Known Member

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    Hey guys,
    Trying to decide wether i should sell or keep one of my properties and just wondering which type of professional(mortgage broker/accountant/financial adviser...) can help me make an informed decision. Like going through all the different scenarios of selling or keeping the property as a long term rental.
    I know the most common things involved in selling a property like selling costs and so on but what's complicating the matter for me is the fact that when i first bought the property(2011) i was meant to move into it after a year or so so it was meant to be more like home than and IP.
    so i was paying principal and interest. Personal circumstances pushed that 1 year to a many years and i refinanced in 2014 to interest only. The property has been rented since then and i haven't been able to move in...

    It seems to me that all that paid principal has been wasted money ... and not too sure if i should keep the property as a long term rental or if i should sell it and hence the dilemma.

    Cheers
     
  2. Mumbai

    Mumbai Well-Known Member

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    You wouldn't have paid a lot of principal in the three years. Even of you have, you can redraw the amount to use it for another investment property expenses. If the extra paid amount is your only issue, I wouldn't sweat it much and keep it as a long time rental until you 'need' to sell it.
     
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  3. HUGH72

    HUGH72 Well-Known Member

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    Not enough information to provide an opinion but between your mortgage broker and accountant I'm sure you could run some different senarios.
    I wouldn't worry about having paid down some of the ip loan, you have built up more equity and improved the cash flow.
    Do you have your own home as well? Does it have a large non deductible loan? This might change the answer to the question.
     
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  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Have you evaluated the property as a rental? Is the rent covering costs? If it's looking after itself, I'd be inclined to keep it unless it's holding you back from what ever comes next.
     
  5. ashish1137

    ashish1137 Well-Known Member

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    Hi Paul,

    To some extent, I agree with what Jess mentioned.

    Is the rental covering your costs or you are paying out of pocket per year.

    How i the maintenance?

    How old is the house?

    How much it has appreciated?

    Do you have some equity?

    I am new so not much well versed with areas but if you mention the area, I am sure people are going to come back with a good advice.

    Regards
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    paulF likes this.
  7. Marg4000

    Marg4000 Well-Known Member

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    So you never moved in - it has always been an an IP?

    My main consideration would be how you see the area gaining value - i.e. future capital gain prospects.
    Marg
     
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  8. wylie

    wylie Moderator Staff Member

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    Also, apart from everything else, is it worth paying commission on the sale and buy in costs to get into another IP as a trade off for having paid down some of the loan?

    You would be losing way more by selling than what you've "lost" already if that is your main concern.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes good point Wylie - you would really be selling one property to buy another.
     
  10. paulF

    paulF Well-Known Member

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    Thanks very much for the great replies everyone. That's a lot of food for thought!
    A bit more info about the property, It's in Glenhaven/NSW and it pretty much appreciated by about 50% over time based on the median house price around the area. And it's positively geared.
    I used some equity to buy PPOR in Melbourne around mid 2014.(same equity value is already saved under offset account).

    The way my thinking is heading is to sell the IP, close off PPOR mortgage(or maybe some of it and also this can be turned into an IP later on) and have some reserves to buy an other IP or invest in something else when i find good opportunities around as i don't believe the property will have such gains in the short/medium term.

    Again, thanks very much for all the replies
     
  11. Foxdan

    Foxdan Well-Known Member

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    Glenhaven and positively geared... I wouldn't sell that. Go speak to a broker to redraw equity and put the money against your PPOR or use it for more investing. if it's paying for itself, you should have better options available than to sell it.
     
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  12. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    You need to do some planning or you risk making more mistakes with your current PPOR. Chat to a broker and get your self structured correctly so you have flexibility moving forward. No point paying down this PPOR if it's got the potential to become an IP in the future.
     
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  13. Bran

    Bran Well-Known Member

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    Glenhaven and positively geared?? KEEP!

    We sold our beautiful family home there for 400k before it shot up to a mill. Bugger.
     
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  14. paulF

    paulF Well-Known Member

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    The property became positively geared over the past few years due to low IR rates, paying down the loan as above and starting with 20% deposit...

    Visit to my mortgage broker is in order. Thanks again everyone, much appreciated.
     
  15. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Just stay away from the one I highlighted above.
     
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  16. ashish1137

    ashish1137 Well-Known Member

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    I would not sell that property if i were you.
     
  17. Kashmir

    Kashmir Well-Known Member

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    Glenhaven is such a pretty part of the city! I wouldn't sell given you are positively geared.