What would you do i this situation ?

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 ?

 

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.

 

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?

 

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.

 

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

 

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.

 

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

 

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.

 

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

 

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!

 

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?

 

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.

 

@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?

 

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.

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.

 

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

 

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

 

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

 

@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

 

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

 

@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