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Discussion in 'Real Estate' started by Mark88, 8th Sep, 2014.

  1. Mark88

    Mark88 Active Member

    Joined:
    7th Feb, 2010
    Posts:
    31
    Location:
    Sydney, NSW
    Hi everyone,

    Would appreciate everyones opinions please. I'm 26 and have a salary of about 80k & going to get married next year & this is my current situation:
    - 1st IP bought in 2011. House in Blacktown bought for $357k. Current morgage is $360k & house is worth approximately $430k. I lived in this house for 6 months to claim FHOG and then rented it out.
    - 2nd IP bought in 2013. House in Kings Park bought for $468k. Current mortgage is $334k & house is worth approximately $540k. Currently tenanted.

    House number 2 has a pool which needs replacing & needs some other renovations on top of this. My initial plan was to turn the second IP in Kings Park into my PPOR once I move out of home. However, the fiance doesn't really want to live in it so we may have to buy something else.

    Would you continue both of these houses as IPs and buy something else or sell one of them? I'm leaning towards selling property number 2 and just keeping the 1 IP for now but I'm not sure...
     
  2. Mark88

    Mark88 Active Member

    Joined:
    7th Feb, 2010
    Posts:
    31
    Location:
    Sydney, NSW
    The other thought I had was to sell property number 2 and do a knock down & rebuild on property 1 but I'm not sure if this is a good decision or not...
     
  3. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Mark,
    There is not enough information as to what you want to do re longer term goals or affordability/cash flow from the 2 IP's. You have only had these for a couple of years so in general terms, property should be held as a long term investment for at least 1 or 2 property cycles.
    If they are duds (no capital growth or difficult rentals) then a different decision but if they are growing in value consistent with the area and achieving reasonable rent yields and consistently tenanted, why sell at all?

    Most investors would keep away from IP's with pools, too much trouble for the possible additional rent received unless in an area where all have pools.

    As to demolishing IP#1, for what purpose and is it feasible in terms of return?
     
  4. Mark88

    Mark88 Active Member

    Joined:
    7th Feb, 2010
    Posts:
    31
    Location:
    Sydney, NSW
    Sorry, let me make my questions a bit more clear.

    Property number 2 in Kings Park currently has a pool that needs to be removed (about 10k) & a retaining wall that needs to be repaired (will cost about 15k). I don't know whether I should make these repairs to the property and continue it as an IP OR just sell it and use the proceeds to help purchase my PPOR.

    It has increased in value approx 80k since I purchased it ..I have calculated that if I sell it then I will still make a profit of 40k or so once CGT, commisions etc are deducted so I will not lose anything by selling it.

    However, if I keep the property then I need to pump money into it to keep it for rental PLUS my mortgage for my PPOR will be bigger.

    So, should I sell it or should I keep it?
     
  5. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Impossible to answer such a broad question. No one knows your full situation other than yourself and no one knows the future - you can only predict growth by making educated guesses.
     
  6. Pete Ramoza

    Pete Ramoza Active Member

    Joined:
    29th Jul, 2012
    Posts:
    40
    Location:
    Brisbane, Qld
    Sorry Mark but there are just too many "what-ifs" in your scenario. As Terry said, only you know your whole story so it would just be educated guesses. Maybe talk to your financial advisor?
     
  7. nathan2k

    nathan2k New Member

    Joined:
    1st May, 2016
    Posts:
    1
    Location:
    Brisbane, QLD
    Mark, If this was my situation.

    I would spend more time on investigating repairing the pool. I would get some quotes and then talk to my accountant to see if the repairs are considered maintenance which could then be tax deductible.

    If yes, I would proceed with the repairs. If no, I would choose the cheapest option to resolve.

    You dont say what the other renovations are and cost but the same advice with the pool. Work out if these are maintenance and tax deductible and then go from there.