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What would you do i this situation ?

Discussion in 'General Property Chat' started by the world is your oyster, 19th Feb, 2016.

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  1. the world is your oyster

    the world is your oyster Well-Known Member

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    Hi Guys and Girls

    I have a big situation and a big decision I have to make in the very near future I have Two properties one a super Lemmon and one has done good

    equity / capital loss
    Deal 1 vic Equity $147.500 after all costs of selling
    Deal 2 qld Loss $175.000 after all selling costs

    Iam crunching numbers to see why I should hold on to these
    I have spoken with a mortgage broker regarding borrowing alibility with and with out the properties

    • With the properties - $0 borrowing ability cash flow loss $10.600
    • With out qld Property - $200k borrowing ability cash flow loss $2150
    • With no properties - $350k borrowing ability cash flow loss $1375
    the only thing is stoping me is seeing I have lost the $175.000 is the lemon deal but that is what is holding me back and tied to a job more then ever

    Whats your opinions guys ?
     
  2. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hello,
    Hope you are well?
    If you have a lemon some times its better to move on and not waste time. Was this lemon bought in a gas mining area?

    If you got a accountant have a talk to him or she about selling at a loss. You may be able to use a capital loss for a future capital gain property.
     
  3. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    If you sell the property that is performing well what are you going to buy? Another property that is performing well? Add into that your selling fees and the purchasing fees for the new property and your turning a good investment into a bad one.

    Is the QLD lemon a temporary situation or are things looking up in the long term?
     
    Last edited: 19th Feb, 2016
  4. jaybean

    jaybean Well-Known Member

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    I always say it's always important in a post-APRA environment to consider whether you can even redeploy that money. Having a property that will do nothing for a few years or rise in line with inflation may be better than selling that to buy another, but finding you can't even get financing anymore even if you purchased another for the same or cheaper price.
     
    Terry_w likes this.
  5. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    All I can say is what's done is done.
    What option will work best with your future circumstances and goals.
     
  6. ellejay

    ellejay Well-Known Member

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    Hard to comment about the vic one without knowing more about it but on the face of it, after all costs what are you actually going to be able to buy for $350k that may perform better? Do you have a property/area in mind that could improve your position? If you just got rid of the q'land one, what could you buy for $200k unless you could make some money on a quick reno on a cheapie? Maybe just the extra cash flow would help you.

    I don't know your circumstances. Could you increase your earnings? It may be better to do nothing at all until you've saved more to put into the purchase.
     
  7. HUGH72

    HUGH72 Well-Known Member

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    Sell the Gladstone property and move on, pay down a little debt and buy again in a couple of years. Earlier if you can.
     
  8. Tyler Durden

    Tyler Durden Well-Known Member

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    I'm with @HUGH72.

    I know it's a sh!tty situation to be in but in this current environment, trying to double down and regain your loss by selling both properties and buying another is probably not a good idea.

    I would try and work out ways to increase or supplement my income, keep the VIC property, while piling as much money into savings (or the offset) as possible with a goal toward walking away from the 4680 property. With median prices slightly below pre-boom levels (2009) I would say there isn't a great deal of pressure left on prices in the area.

    You're young (I'm guessing) plenty of time to wipe the slate and try another strategy.
     
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  9. the world is your oyster

    the world is your oyster Well-Known Member

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    Thanks for that guys
    My qld house is in Gladstone btw
    My vic house is in moe
    Gladstone I done rising to much rents/prices due to the sheer amount of stock there
    Moe has always proformed ok but capital growth is not to much due to being in a reginal town is not cbd location

    To make my goals more clearer and what Iam trying to achieve :

    : have $1,250,000 of equity/capital invested in realestate retiring 8% pa to give me a passive income of $100,000 pa

    : I plan to do some creative deals to raise capital in the beginning but also plan to buy and hold also maybe with the help of a selected buyers agent or keep so thing I have manufactured myself

    So as I look at it if I want to do a subdivision or Reno $350,000 is better then $200,000 to start this when I first started 9 years ago I had no plan no goal no vision what I was trying to achieve now I do o have much more chance of success due to having direction to follow
     
  10. WattleIdo

    WattleIdo renovating Premium Member

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    Agree with the others who said keep the good one, get rid of the bad one. The good one does seem very good. You did that right! :)
     
    Last edited: 19th Feb, 2016
  11. JacM

    JacM VIC Buyer's Agent Business Member

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    From the figures above, it looks to me like the capital loss if you liquidate both is $27,500 .

    The cashflow loss figures you have described... is that a per annum figure per year for the next 20 yrs?
     
  12. Tyler Durden

    Tyler Durden Well-Known Member

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    In my haste I did miss that "deal 2" was -$175,000 and not -$75,000....

    With that in mind I think @JacM is about to point you in the right direction.
     
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  13. meme plecko

    meme plecko Well-Known Member

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    @the world is your oyster, so if you sell your Qld property and keep your Vic property, what happens to your Qld property loan? How do you cover for the difference?
     
    Last edited: 19th Feb, 2016
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  14. JacM

    JacM VIC Buyer's Agent Business Member

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    I love it that there are several people standing to attention here in problem-solving mode. You're a lucky man @the world is your oyster . Looking forward to seeing your answers to the above questions so we can continue the conversation. :D:D:D

    It would also be helpful to know if you have any shares or other assets that have made a "gain" that could be offset against the loss if sold.
     
  15. the world is your oyster

    the world is your oyster Well-Known Member

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    That loan will go on to the vic loan
    And after all selling costs etc I will owe more on it then the value and it would turn from a positive cashflow to negative cashflow

    That's why Iam thinking of option 3 and sell all three and only have a negative cashflow of 1300 pa
     
  16. the world is your oyster

    the world is your oyster Well-Known Member

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    Yes a loss of $175,000
    And as far as I know that loss would off set the capital gain from the big house so no tax to pay on the Victoria house
     
  17. the world is your oyster

    the world is your oyster Well-Known Member

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    Thanks , no I havnt made a gain else where beside the vic house the capital loss would offset that
     
  18. JacM

    JacM VIC Buyer's Agent Business Member

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    @the world is your oyster

    Hang on... there are 3 properties? I thought there were only 2 ?

    Also where do the numbers below come from?
    • With the properties - $0 borrowing ability cash flow loss $10.600
    • With out qld Property - $200k borrowing ability cash flow loss $2150
    • With no properties - $350k borrowing ability cash flow loss $1375
     
  19. the world is your oyster

    the world is your oyster Well-Known Member

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    Hi
    There are only two properties
    I got a broker to do some research on my borrowing abilities for 3 different situations
    1 keep the properties I can't borrow no more I have reached my ceiling and they are the numbers from last year EOFY
    2 sell qld and incorporate the capital loss to the remaining vic loan so the only expense that would change would be the interest would be more to hold hence the negative cashflow
    And I could then borrow 200 k based on my income and a 20 k deposit
    3 sell all properties based on my income and a deposit of 20k I could borrow 350 k and stil have holding cost as the capital loss in qld is greater then the capital gain of vic
     
  20. JacM

    JacM VIC Buyer's Agent Business Member

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    @the world is your oyster

    ok, so re the comment below, for how many years would you have this loss per annum? 20 I assume? Since $27500 divided by $1375 equals 20 ?

    • With no properties - $350k borrowing ability cash flow loss $1375