Should I sell my Brisbane Unit ?

Another ploy in a slow rental market is to maintain the asking rental but offer the first week free (if really slow then maybe 2 weeks for a 12 month lease). But make sure the PM agrees not to charge you the foregone commission on that weeks rent!
Marg

 

Thanks Marg, doesn't sound from this thread that too many people are bothered about the oversupply claims for the Brisbane unit market ! and its just a matter of doing whatever to get a tenant and stick it out for as long as poss. The strategy was always to hold long term and pay down the loan for passive income !

 

Question, for the ease of calculation, would holding rent and giving free stay be better off than reducing rent?

1. Free 2 months rent for 1 year, rental is 1200 per month - total 12000
2. Lower rent, 1000, no free stay, total - 12000

Which is better?

 

In my opinion, I think lower rent better for cash flow and casts a wider net when fishing for tenants. I don't like the free rent thing so much, sounds too desperate to me ! I'd rather add some value

 

I wouldn't go the expense of built-in BBQ. Just one on wheels - unless it's too easy for it to get nicked. You could pick up a cheap one on Gumtree - and claim it. Sometimes incidental things like that can sway a potential tenant. Does the courtyard get sun? Does it have a raised planter box? They can be a cheap thing to do, too. Once tenants plant veges and do stuff like that, they tend to hang around.

 

i am a bit suprised it is hard to get tenants when you are so close to the UQ. $1100 a quarter is steep as an apartment in melbourne with gym, pool, lift, daily cleaning, sinking funds as well and 5:30-8am everyday security cost less than that. Go to the university of Queensland - go and see the all the clubs and societies from kungfu club, chinese student clubs, indonesian student clubs to french speaking club etc. get some great looking photos and put them on their facebook page for listing. Or list it in the university off campus accommodation. go outside the square as oppose to doing what everyone else is doing.

 

I agree $1100 is steep but not much we can do about it. Just another reason to sell. Uni students are not main demo in fact would much prefer not to have uni students, it was always just a good fallback and another market we could target.

 

i would just get a bunch of asian uni students who basically spend time studying and not doing too much else.Koreans, indonesians, malaysian, taiwanese (a lot of them in brisbane). In Monash unversity in melbourne, this kind of situations are rarely heard of unless your place is more than the usual rental. I remember a uni student paying me 2 years in advance and then told me not to bother him and he would not bother me with any requests unless something blows up. after the 2 years he just released the bond coz couldn't be bothered cleaning up.

 

Yeah sure - panic and sell and be like 80% of investors who buy only 1 x IP and sell that within the first 5 years of ownership most citing tenant issues as the reason. See how wealthy that will make you in the long term.

 

The question is whether the current need to drop the rent by 10% is evidence of the widespread media reports of oversupply that is only get to get worse over the medium to long term ? If yes then we are facing long term high vacancy rates and low growth prospects on cards for the next few years in which case would it be better to sell now ? Or would it just be panic. Thats the question, its not a panic sell because I can't find a tenant for few weeks

 

Not sure you would want kung fu club members as tenants. The might put holes in the walls ...

 

Rents go up and can sometimes go down. Interest rates and vacancy rates the same. Governments of all persuasions come, interfere in the property market and go. If you are going to hold for the long term you will experience all this and more. Stick with the plan. Ignore media noise. Do nothing in haste. Don't panic and hold allowing time to do its work.

If you sell and buy again, how do you know how it will perform? And then you will be faced with the same or a similar situation again. You may as well decide what to do now this time. Cheers.

 

I know your area well. You will eventually get a tenant and sometimes it is luck and timing as to how much vacancy you will have. Ours have ranged from 0 days to 8 weeks for the same property. Rent will go up and down in that range. Bad news is I don't think you will have good capital growth for well over 5 years.

 

How long until the massive development of student units at UQ come online? Probably a few years off, but worth considering as well. These won't suit everyone though.

 

Agreed, thank you for that it makes a lot of sense, and sometimes we just need reminding

 

if you can see the writing on the wall then follow it!

just dont put yourself in a position of HAVING to act.
Im trying to sell a brisbane inner city unit, It has a lot of good features and has been a reasonable earner... now its cash flow nuetral but I think I can put hte money to better use somewhere else.

trouble is that the market has dropped and there is no one out there. I have had two offers in the first three weeks but nowhere near what it was worth in 2013 when i refinanced.

Thats OK. its not costing me money and Im not forced to sell. I expect the value to drop eevn further over the next 3-5 years (its in tenneriffe/fortitude valley) but Im just going to ride it out. It was never bought for amazing capital gain but solid cashflow and that is what it does so I can hardly complain. I would really hate to be hurting financially and be in the same situation though

If I was worried about job security and cash flow in the next 5 years then I would cut my losses and bail now.
I would be thankful for the lowball sydney investor offer instead of amused.

Always think of your total financial situation and not just the individual IP scenario.

 

Thanks, its not exactly a huge drain $25/wk negative before vacancy & maintenance and we have the disposable income to cover it so its not terrible terrible but its negative all the same - and thats fine if there are reasonable growth prospects but without that it just seems a little pointless because you're still stuck with the hassle and risk

 

I'm thinking if we can get away with a break even or small loss we would be better off. It was our first investment property (since purchased 4 others doing much better) so maybe can be forgiven for not getting it right first time eh !

 

Good demand in the student market around UQ at the moment. That will last till Mid July. Try advertising here, it's free UQ Rentals Try and have the lease end in Late Jan/February if you wanna target the student market and once you're there only do 12 month leases.