When should I sell? Regional Vic properties

Hiya, I need some help! I’ve got a 2bd unit in Bendigo/ Strathdale and a 2bd unit in Geelong/ Leopold and I don’t know if I should sell one/ both or hold on.
The Bendigo unit I’ve had for ten years and theres been no growth in price for the last few years (sitting at around 250k). This place probably needs a wet area renovation but has a secure long term tenant and is returning about 2.5k after expenses. I’ve also got about 100k sitting in here.
The Geelong house is newer and I’ve had this for about 2 years now. It is costing me 3.5k a year and the tenant is signed on until June. I’ve made about 60k on it but I’m not sure about the market at the moment and don’t want my costs to eat into the capital it’s gained.
Which would be better to keep if any? Sell Bendigo and reduce the mortgage on Geelong? Renovate Bendigo and sell? I’ve never actually had a mentor or advise on IP’s so any and all help is appreciated.

 

If you are going to hold real estate assets as an investment, then you will get some years of growth, some of flat, some of slightly rising / slightly falling. You don't sell just because there is equity in a property that you can convert to cash. Bear in mind if you do do that then:
1. You'll have to pay REA sales commissions
2. CGT
3. What are you going to do with the cash? If you buy another property:
a) You will pay stamp duty, loan establishment fees, conveyancing fees etc to get in
b) Will it be guaranteed to grow?

If I were in your position. I'd be looking to extract some equity to buy more property and holding the ones you do have.

The Bendigo unit is not costing you anything to hold. It's making money.
The Geelong house is only 2 years into a (10??) year hold, minimum.
Both are within easy commute to Melbourne.

Seriously, stop listening to all the doom & gloom and go seek to buy some more while market sentiment is negative and you can buy at a discount.

 

Hmm .. I am curious to see how Geelong goes for the next few years but was wondering what other people thought because I’ve never really spoken to anyone about this! So thank you so much for your feedback.

tunirt,

 

I think the first question should be - why are you considering selling? There’s obviously a reason you’re considering it so ascertaining that will allow people to provide some further guidance. There is no one size fits all with these sorts of decisions.

- Andrew

 

No real reason to sell really. Potentially free up some capital, reinvest in another property while the market is falling, sell before I have to do too much maintenance. I’ve never sold before so I was curious to see what others would do in my situation.

 

10 yr no growth is pretty bad.
If its been a flatline growth, you shoukd have experienced some part of the growth cycle.

10 yrs flat growth to me indicates cg potential is going to be low.

Ive got/had a few with 6 yrs or 7 yrs flat growth and i consider them to be duds

 

Sorry to say this but the fact that Bendigo investment has seen no growth in last 10 yrs and not much potential to generate equity either it's not really the best or smartest investment...

Geelong market has performed well but again I think something with bit more land component would have been better investment.

Best to sit down with your broker and accountant to work out what the strategy/goal is and make decisions accordingly!.

 

Sorry I should have clarified, there was massive growth within the first 3 years, following seven years flatline.

 

@See Change has a slightly different theory on this I believe?

 

Generally .

The first place's I look at are places that have long periods of flat or low growth, but , the " fundamentals "have to be right , hence I'm unlikely to ever buy in Gladstone .

But , everything might slow down for some years ( not sure how many ) while the fallout for the banking and the change in govt affects things . It still didn't stop Tasmania from booming though .

Cliff

 

10 yrs is too long for flat for me personally, i think during that tine you should have been affected by cycles.

Whats see changes theory?

I hope im wrong

 

A buddy has access to long term prices.
@S@ra if you struggle with per annum percentages then Google converting them, but in simple terms 2% per annum means 2% on first year price, then 2% on this new price in the next year etc. etc.=this is how compounding works (not belittling here just realise some struggle with the maths side)

Longest possible:
Leopold units, median unit price growth rate since August 1983=6.83% per annum
$37,000 now $351,500 (Oct 2018)

Strathdale units, median unit price growth rate since December 1980=5.89% per annum
$33,000 now $278,500 (Oct 2018)


Leopold units=other rates:
15 year=4.76% per annum
10 year=2.87% per annum
5 years=4.28% per annum

Strathdale units=other rates:
15 year=3.35% per annum
10 year=3.52% per annum
5 year=4.83% per annum

My 2 cents is from a capital growth perspective=would a bank deposit have beaten these rates? I actually don't know the answer, maybe someone else does.

Enjoy

 

With term deposits, your implications are tax and cpi which are fairly set

With ips, ypu have rates, insurance, maintenace, tensnts, vacancies which are all variable

Not a simple comparison

 

Maybe hold the Bendigo unit for a little longer:

"Bendigo, which overtook previous market leader Ballarat in our Spring 2018 survey, has increased its lead in the Summer survey. It now has 10 suburbs with rising demand, making it one of the leading LGAs in the nation. Growth suburbs include California Gully, Golden Square, Kangaroo Flat, Long Gully, Maiden Gully and North Bendigo.

The recent surge in sales activity is starting to create solid price growth, with California Gully, Eaglehawk, Flora Hill, Heathcote, Kennington and North Bendigo all up 6-8% in the past year. Like Ballarat, Bendigo is attracting both investors and home-buyers from Melbourne and elsewhere."

Regional Victorian leads the nation in house price growth: Hotspotting's Terry Ryder​

 

I suppose I was talking about pre tax.

 

It's not my place to try and paraphrase but many comments alluding to it are contained for posterity on this site's predecessor if you take the time to read them...

Timing or progress so far - a brief outline
Rocky , The next Big Thing ??
Somersoft Leading indicator ticks up
See Change and Richard Feynman . let's hype the sydney market thread .