Should I Sell or Rent it?

Discussion in 'Investment Strategy' started by Billa, 5th Feb, 2020.

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  1. Billa

    Billa Well-Known Member

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    Hi,

    I would kindly ask for opinions regarding my current situation, I'm 35M, single.

    Purchased my 1st property (PPOR) with the intention as IP, a townhouse in Canberra one of the newer Gungahlin suburb Moncrieff, i've been living there for almost 2 years now.

    Location wise, the unit is very close to local school, and 5min drive gungahlin town center, 5m to the light rail station, ~15km to city center.

    and i paid 500k for it with 3/2/2, i think i've made a wrong choice of purchasing a townhouse as body corp cost, rate & land tax is too high of cost to managed.

    Few weeks ago my neighbour sold his place for 485k, not only it didn't made any capital gain in past 2 years but the value of the place has depreciated too.

    the current rental price can fetch around $550 - $570 per wk.

    Currently i'm paying $1800 per month on my mortgage.

    what would you do if you were in my position?

    1) do you move out and rent the townhouse out, and hoping in about 2 - 3 years it might gain some values? and gain some benefit from tax claim?
    2) sell it and absorb large losses now?
     
  2. Trainee

    Trainee Well-Known Member

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    What would you do with the proceeds? Whats the plan here?
     
  3. Billa

    Billa Well-Known Member

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    I'm not quite sure yet.

    if I move out and rent, I will be looking 1 bedroom decent apartment close to cbd they all starting from 400ish price range, and i probably looking at ~$1700 per month on rental which no any lesser than what i'm currently paying for my mortgage.
    Is it wiser?
     
  4. wylie

    wylie Moderator Staff Member

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    If you pick the middle of the rent price range you gave, $550 per week, that is $28,600 per year in rent. Your mortgage is $21,600. How much do you pay in body corporate and other holding expenses?

    If we had sold any properties when there was a dip in the market, we would kick ourselves now.

    We have sold properties to fund lifestyle, but never because they'd dipped a little.

    If this property rents easily, and will be worth considerably more in five or ten years (which most properties should if held long term - generally), then I'd hold.

    Have you talked to a broker to see if you can afford to hold this whilst buying a cheaper place closer to the city?
     
    significance likes this.
  5. Trainee

    Trainee Well-Known Member

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    The problem, op, is that you are basing a decision only on how the property has performed in the last two years. Thats not a good reason to sell.
     
    Cia, MWI, Beano and 3 others like this.
  6. The Y-man

    The Y-man Moderator Staff Member

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    Agree - way too soon.

    @Billa

    Do you work? I ask because this place prob means you can claim depreciation too if you rent it out.

    Why is the BC so high? What are the charges for?

    The Y-man
     
  7. Billa

    Billa Well-Known Member

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    psychologically i'm freaking out, that I've made a wrong decision and better to loss less now than more later if i hold it for longer.
     
  8. Lacrim

    Lacrim Well-Known Member

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    Personally I'd think about selling only because I view CBR as a place where you invest in house and land. Same goes for Brisbane, same goes for Perth, Adelaide etc. It's unlike Syd and Melbourne in that way - I would buy and have bought/got units there.
     
  9. wylie

    wylie Moderator Staff Member

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    Also, you mention land tax, and I'm thinking you mean you'd be paying it if you turn this main residence into a rental? You aren't paying land tax now? How much would it be if you do have to pay it?
     
  10. Billa

    Billa Well-Known Member

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    body corp is about $3200 per year, and and the holding expense approx $3000.
    yes, the property in my suburb is easy to rent and I've checked that with real estate agent due to it is newer property and close to amenities, school, and shops.
    from my complex I've seen within 1 - 2 weeks the place will be rented out.

    why you think i should get another place if I'm financially concern with this the current unit.
     
  11. Billa

    Billa Well-Known Member

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    it is my 1st property and lack of research, I've learnt an expensive lesson.
    now i understand apartment & townshouses is bad investment choice.
     
  12. Billa

    Billa Well-Known Member

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    currently i owned them around ~2000, i request to put me into payment plan and paying it on monthly basis, and I'm getting charged for interest too :(
     
  13. TMNT

    TMNT Well-Known Member

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    I dont know the suburbs you are referring to however, generally 1bdr apartments capital growth wise are very low

    You might be faced with the same dilemma in 2years time again!
     
  14. Lacrim

    Lacrim Well-Known Member

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    I'm not saying its a bad investment choice but I would've gone for an old house/land if I was buying in CBR.
     
  15. ashish1137

    ashish1137 Well-Known Member

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    Seems you will pay more on selling than holding.

    I would say hold. You are not going to find anything better unless you know what you are doing.

    Regards
     
    significance likes this.
  16. The Y-man

    The Y-man Moderator Staff Member

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    That's insane - pay it off urgently! BC penalty interest rates are like 7~15%pa? :eek::eek::eek::eek:

    You still haven't told us what the BC costs are made up of.

    The Y-man
     
  17. The Y-man

    The Y-man Moderator Staff Member

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    Do you think having a house is any cheaper?
    You may have to pay more in rates, insurance, maintenance and repairs than you pay now for your BC.

    The Y-man
     
  18. The Y-man

    The Y-man Moderator Staff Member

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    If you had bought a house in the area 2 years ago how much would it be worth now? Have they gone up or stagnated as well?

    The Y-man
     
  19. Trainee

    Trainee Well-Known Member

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    dont understand this. Ppor should be exempt from land tax?

    if you owe body corp 2k and cant pay it back, thats a different problem if you really cant afford this property. Save more, cut expenses?

    put it another way. Say the property had gone up 10% in the last 2 years. What would you be thinking?
     
  20. Billa

    Billa Well-Known Member

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    that's my fear too :(