To Sell or Not to Sell

Hey there,

I'm after some opinions/advice surrounding my situation.

I have a Townhouse in the GC, I purchased in 2016 for $295K, it currently rents for $450 a week, I owe $180k on the loan. Based on appraisals, I should be able to get $400k-$410K for it.
All of the rates collectively cost between $7.5k-$8.5k per year (a lot IMO).
Then I also have my loan interest to pay so I barely come out ontop with respect to rent.

I recently quit my job and began a masters degree and have enough liquid to support me for the next 2 years. But with it being a townhouse, and having such high rates, and having already gone up around 30% since I purchased, and having a current taxable income of zero dollars, I am trying to decide if it is best to sell. Then purchase another property (not a townhouse or unit) in the next 2 years.

Thank you for any info advice, I really appreciate it in this time of decision making.

 

What falls into the collective rates category? Seems very high! I’m surprised it’s not putting cash in your pocket after all expenses including interest @ a debt level of 180k.
It’s hard to say without knowing more info.

 

Rates, levy, and water fit into the "collective rates" category. I agree, it is high. I am unable to get tenants to pay for water.

I was also just told that I can expect at least $450k and potentially $460k depending on time in market from agent.

I suppose with the potential slowing of the market come 2023 and having already had good growth, I struggle to see just as good growth for the townhouse over the next 5-10 years.

Plus, with not working now I can make the most of the gain via limited CGT.

Just seeking opinion if it seems like a "mistake" to sell in the scheme of potential growth over the next 10 years, or if this really is a close to ideal circumstance and time to sell.

 

When you say levy, do you mean body Corp?
In terms of 10 year growth depends more so on the suburb rather than the property type. Maybe someone GC centric can comment further.
Nothing wrong with GC and I think there is plenty of upside but I find it hard to justify 8.5k in rates. That’s a real killer.

 

Sorry, I should have been clearer with it, yes I mean body corporate.
I will be in a position to lump sum pay it off in the next 12-18 months, but even then, I am fairly certain I can do better things with my money. Even if I do pay it off, more than 1/3 of my pure rental income will go towards all of those rates.

 

Yeah I tend to agree. Way too high. I’d caution against waiting 2 years to buy. If you can get back into the market earlier and ensuring better quality investment grade stock then do so. Obviously run the numbers on if you can manage the cashflow shortfall while studying and get the loan sorted before you stop work.

 

Apologies, just saw you’ve already quit.

 

Can you live in it?

We recently changed our minds on selling a GC townhouse. It has made us money, always been cash flow positive and outlook seems good.

Family member using it ATM, would love to retire in it!

 

This is the thing, if I sell this property now, I have around 250K liquid, and then I receive an injury benifit from military service of around 400K in 12-18months. So with 650k, I could buy 2 really cheap places or get one more expensive IP and buy it/them outright which will give me far more cash flow than what I currently have or could have from my GC townhouse.

Then when I transition back into working after masters I can refinance the houses and draw them both down to 50%.

This makes sense to me and feels like the better option. Rather than holding onto something that just "feels" a bit mediocre. Does this track for you as a decent plan as apposed to just holding the current property for 10+ more years?

 

12-18 months sounds too quick, the 'D' in DVA stands for delay ;-)

The DVA have a better kill ratio than the Al-Qaeda, you might find your claim taking a substantial amount of time, not sure how this will effect your current/future plans.