Sydney, NSW : Unit : Rent or Sell ?

Discussion in 'Property Experts' started by Bhb, 14th Jul, 2020.

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  1. Bhb

    Bhb Well-Known Member

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    Sydney
    Hi All,

    I am currently living in a 2 bed ,2 bath, 1 parking unit approx 5 mins drive from Parramatta station which I bought brand new around 4 years ago.
    Due to the huge supply of units in this area, prices has gone down.

    I am now planning to buy a house and move. So, I am confused whether to rent this unit or sell it . which option is beneficial ? So looking for some suggestions please.

    I have enough savings to pay 20% initial deposit for the new house. So, selling the unit is not a necessity.

    Details of Unit :

    Purchased price of Unit : 605k
    Loan balance : 408K
    Current value (approx): 550k
    Mortgage per month : $1700 per month
    Potential Rent : $1600 per month
    Strata : $1000 per quarter
    Council Fee : $1300 per annum
    Age of unit : 4 years

    Thanks in advance !
     
  2. Stoffo

    Stoffo Well-Known Member

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    Can you afford the repayments and outgoings for both properties ?
    Assuming that the unit may remain empty for some time .....
     
  3. Trainee

    Trainee Well-Known Member

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    Opportunity cost: if you sold, what would you do with the net proceeds and borrowing capacity? Do you expect that to perform better than the unit if you held it?

    can you afford vacancies and repairs (partly depends on how much you can save and how much you have left after the house).

    Depreciation on the unit might be limited by the 2017 rule changes.
     
  4. Bhb

    Bhb Well-Known Member

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    Yes , I can manage both the payments. That was my initial plan.

    But I am confused if the would be the right choice or if selling it would be better.

    Thanks
     
  5. Bhb

    Bhb Well-Known Member

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    To be frank, I haven't thought about where to use the net proceeds. That is a good point to consider. I was only thinking about how to get out of this situation with less losses. Because I was worried that If I rent this unit and if the unit price & rents go down further, It will be a bigger loss than what I currently have.
     
  6. Gockie

    Gockie Life is good ☺️ Premium Member

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    If you sell remember you'll be paying an agents commission and spending money on marketing, plus solicitors fees.

    Personally, I don't think your apartment is necessarily going to go up in value anytime soon either, and I don't know if your strata is going to increase, but let's assume it might.

    Worst case scenario is if your building is something like the Opal Tower or the Mascot Tower, in which case, sell it now, it's a huge liability.
     
    Stoffo likes this.
  7. Bhb

    Bhb Well-Known Member

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    My building has only 4 floors and 20 units.Yes - I don't think the prices will go up anytime soon. There are many units vacant around my building and many new buildings under construction.This is what made me think about selling it. I know I am in loss but I am worried that the loss might go up in future :(
     
  8. Gockie

    Gockie Life is good ☺️ Premium Member

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    Ok, go for your peace of mind option then. If you are losing sleep over it, then put it on the market.
    If not, then it's really your choice to keep it or put it in the market. If it's a vanilla (nothing special apartment, I think the market mightn't rise for 10 years so, and maybe putting it on the current market now might be the way to go. It's not super weak market, people are still buying.... but who knows a few months down the track it might be a different story.
     
    Bhb likes this.
  9. Stoffo

    Stoffo Well-Known Member

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    The above answers your own original question, you clearly feel that the current loss may increase and you may have an empty rental also.

    Just because you can currently afford to service both loans doesn't mean you should.
    You could sell and use those extra/spare funds to pay down the loan and save toward a better IP in the future.

    So I vote SELL and take the small loss now (opposed to a possible larger cumulative loss later)
     
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  10. Thomacino

    Thomacino Well-Known Member

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    Its only a loss if you sell it.

    My rule for property is to never sell, the cost of stamp duty is just stupidly wasteful.

    a) offer the unit at a heavy discount of market rent conditions.
    b) offset the remainder of option a with your income as you are able to, also has tax benefits.
    c) buy the house you want as you already have 20%
     
    Bhb likes this.
  11. Trainee

    Trainee Well-Known Member

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    Never sell works better when credit is loose (you have the capacity to buy other stuff) and you expect the property to perform eventually.

    where credit is tighter and the property type is......

    should people have sold brisbane units 10 years ago?
     
  12. KFC_8

    KFC_8 Active Member

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    Based on most of the discussion around this forum and in the property market it is apts in high density areas that have the most inherent risk at the moment... I don't really think you can lose that much if you sell as apartment prices don't look like they are going to sky rocket back anytime soon...
     
  13. MB18

    MB18 Well-Known Member

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    It sounds as though the only reason you dont want to sell is because you will have to realise the loss? That in itself is a pretty weak case for holding on, and for that I'd say sell.

    I cant imagine renting it out would be cashflow positive so do you really want to be pouring money into it for another decade or so just to say you didnt loose any money while conveniently ignoring opportunity cost?
     

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