To Sell or Wait?

Asking suggestions for a relo. Basically bought cheap 300k mark about 20 years ago. During peak they could have offloaded it for $1.6 mil - $1.65 mil but it's probably realistically only going to fetch $1.45 - $1.50 mil now as per agent's appraisal. Their land tax is excessive (they have another commercial ip), because of the land tax and council fees they are only able to fetch about 9k after tax. The couple are 63 and 69 years old.

So the options are:

1) Suck it up and just take the $9k per annum and hope the valuation falls.

2) Wait till the market climbs back up a little and sell off, of course this could be in the reverse and cop for falls.

3) Other?

The main reason for selling is basically market looks bad, they aren't too fused about the % drop in value as they bought it cheap and want out before it saps more but also more importantly the yield is incredibly low.

Thanks.

 

given they are 63 and 69, i reckon it's better to sell now and book profit. Market may not come back for another 5-7 years - who knows. (not an advice)

 

they bought it 20years ago! they rided many peaks and troughs many times over and now decided to sell based on the life situation and not timing the market. I think best is to sell in a situation like this cause they have very little to loose and couldn't be bothered about another another PEAK,FOMO OR FONGO!

 

Agree with the above 2 posters!

 

It depends on a number of factors
Namely, do they need the money ?
Clearly the property is CF+, is this their superannuation?

If they are quite well off, driving late model car(s), still going on over seas trips annually, self funded retirees and still in good health, then why sell ?

If they are struggling, going without, missing out on hols and time with family then sell.

$9k in land tax isn't all that much and surely is well covered by rental income.....

 

even if all this is going there is SANF, easy!

 

9k cash flow can be eaten up by the property needing a new stove, plumbing issues, new fencing, hot water replacement....

 

$1.5m of shares would spin off $70k+ in dividends.
Plus franking credits.

 

No headaches, easy dividends....

 

If I was their age I would sell. Even bank interest would be closer to five times this return.

The right commercial property of that value should be returning closer to 100k.

SELL....

You could bank half and buy something else with the other half that would get you a much better return.

 

Given they are in their 60s, definitely sell. No point in waiting another boom

 

Definitely sell , it might be years before they see prices going up again.
With interest rates so low , its going to be virtually impossible to see housing growth like we have seen since the 1980s.
Quite often when you see good drops in interest rates, it also puts a firecracker under house prices, it doesnt always happen , as we saw after the GFC.
Unless variable rates slowly start to go back up around 7%, its going to be almost impossible to see big movements in interest rates around the 2-3% mark.

 

If Labor gets up there should be a bit of pent up demand for those wanting the 50% CGT discount, you want to sell into this demand ~Sept/Oct.

 

i don't understand why will their be pent up demand?
As an investor i need a new buyer (when selling) for my purchase . my investment will be in less demand as new buyer will not benefit from the 50% cgt discount. will only suit owner occupier.

 

I'd say there would probably be a lot more people trying to sell than those that can get finance.
But you never know.

 

Pretty easy decision if you ask me
We are talking a net yield of around .6%.

I don’t know the full situation in terms of taxation but even if they took say 800k off the table after CGT and invested that into the share market they would be WELL ahead.

Heck they could put the 800k in the bank at 3% and still generate close to 25k gross (I imagine at their age they aren’t paying much tax).

 

They're actually my uncle and aunt and since their only son/child is overseas (has been for the lasty 10 years) I'm their closest kin and want a 2nd opinion.

They don't need the money to be honest, the house is not their super. Both live rather frugally, I think the odd holiday here and there but still in good health.

Their main issue/gripe is with the CF being $9k net after everything is considered and as people have mentioned a repair here there can easily further erode this. The main strategy which they've told me their Financial Adviser (Accountant) has said was to sell as he didn't see things improving, if anything going South rather than improving and placing all of the money in a bank. Say they get back $1.3mil after expenses and tax. That'd be $39K p/a before tax assuming 3% interest, that's way 4.3 times more than what they are on atm and honestly I think their IP is on it's last legs. On paper that makes sense, and perhaps more pronounced in a time like this (down market).

Commercial Property is also an option raised but I've had a quick look in the market for them and nothing seems to stand out yield wise, that market itself is going bonkers.

 

Lol should have sold last year, a bit too late now?

 

they bought around $300K still lot of profit to be banked. not too late

 

With the demographic headwind lot of people would be in same spot now.
Now imagine NG/CGT changes and its Potential impact on existing dwelling prices mostly due to absence of a large chunk of buyers(investors) given very poor rental yields with low/no CG potential for years to come in frothy segments(syd/mel).

We might be heading for a perfect storm.