NSW Selling one IP: abbotsford vs pennant hills

We’re in the process of reworking our investment portfolio and are considering selling a property in either abbotsford or pennant hills.

both houses are in the ball park if each other (~10-20%) value wise.

The abbotsford property is close to water, flat land, brick house and won’t need much investment in near term. It’s probably the more valuable of the two.

The pennant hills property is very close to station, old weatherboard and may need the bathroom done or one added to help boost rental in the next few years, and may need an exterior coat of paint, but is otherwise in good shape.

Does anyone have views as to which suburb is likely to grow more and why?

 

Without knowing too much about the properties themselves, their relative location, land sizes and attributes, I think it is fair to say that Abbotsford is a superior suburb to Pennant Hills.

And on that basis, you would want to hold on to Abbotsford and sell Pennant Hills, irrespective of which may or may not have the better growth outlook.

Other things to consider:

1) The Abbotsford property as a brick construction, is set and forget. By contrast Pennant Hills as a weatherboard property does give the dwelling a shelf life of sorts, and this means that you can't hold on to the property without eventually knocking it down or developing it somehow.

2) The Metro West is under construction and going through neighbouring Five Dock. The station will be on the Abbotsford side, and I can't imagine it will not spur some growth to both areas.

3) Abbotsford would likely be harder to buy back if sold.

I suspect that it is possible that most on this blog will suggest keeping the Pennant Hills property, and heck, it may grow more. Lots happening out there. But my suggestion would be to keep Abbotsford - it's a better suburb, level block, and brick construction. Near the water also locks in its value.

It's sort of like the property version of Gresham's Law: hold on to the more valuable, trade the less valuable.

Keep Abbotsford IMHO.

 

Abbotsford. Lived in a unit there when first got married . Nice little place most people dont know exist .
Much more central . Near the water . More unique .

Only reason would be if the cycle hasn't been different and ones gone up more than the other and expecting more growth coming up

Cliff

 

Q : What is the potential CGT cost for each, if sold ?
Q : What is expected impact on taxable income for the sale of either ?
Q : What is the present net of tax weekly cashflow cost of holding each property ?
Q : Any loan break costs ?
Q : What is the net equity (after selling costs and tax and debt payout) of each property ?

These are the things we ofen calculate for clients as a tax planning issue. I often find one stands out as a "dont sell" as it is a high gain, doesnt really affect taxable incoem or use cashflow and maybe doesnt produce the equity. And then we discuss what strategies to save tax that is identified eg super ?

 

1) minimal difference in cgt, probably circa 50k tax delta in favour of abbotsford
2) abbotsford likely to have $100-200p/w higher income if rented on a circa 300-500k value gap vs pennant hills.
3) unsure
4) no
5) both are positive

The main reason we’d look to sell abbotsford is it would free up more cash which would offset more interest elsewhere.

 

I'd look at it a little differently around the growth; do either of them have multi-res development potential now, or potentially in the future with any potential DCP changes?

 

The abbotsford place is slightly under the duplex frontage & area requirement (may be able to be pushed thru via DA)

The pennant hills one may end up being rezoned due to station proximity (who knows if or when) and may also have risk of being heritage listed (next door is). Could possibly put a granny flat in the back.

 

I'd recommend holding both if possible. The yields might be terrible, but both should do amazingly for long term capital growth.

 

Unfortunately not possible without taking a major major gamble on prices continuing to rise as we just upsized our ppor

 

Doing some research if Canada bay adopts the NSW regs for duplex it would comply with rules for duplex