澳洲Australia property Should I sell my Kedron, QLD, 4120 unit f


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hello,

I need some advice on my investment unit located in Kedron, QLD, 4031. It's a small 2 bedroom and completely unrenovated. I paid $260,000 for it 2 years ago.

The reason I want to sell is because it's costing me way too much to keep. The rental income is $210 weekly. It costs me about $2000 a month to keep/maintain including the mortgage payment.

I have been offered $235,000 for it. My mortgage is $235,000. If I accept this deal I will still owe approx. $7000 on the mortgage and $7000 in body corporate fee's.

If I sold for this amount my total debts would be approx. $21,000.

The interest on the mortgage is about 6.5%
The interest on the body corporate is 0%
The interest on my credit card is 9.5% (I owe $4000)
The interest on the remaining amounts is 0%

If I hold on to the unit I will be forced to pay about another $6500 in body corporate fee's in approx. 1 - 2 years. To fully renovate it will be about $25,000.

Should I sell the unit for $235,000 and cut my losses? I would have lost about $40,000 in total and still owe $21,000.

Help! Jason

**the postcode is 4031 (not 4120)  

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The Brisbane market is at the bottom presently and is due to move upward; is it possible to hang on to not miss out on the upcoming capital growth? Have you spoken to your accountant about completing an Income Tax Variation Form to increase your cash flow? (our accountant charges about $110 for this service) and it puts a lot of extra cash in your pocket each week; also is your investment loan interest only as this saves a lot; also it may be worth checking out other banks/societies for cheaper rates (being aware of weighing this up with other administrative costs to switch loans); it is really tough going for us too atm but we are hanging in there for the market to turn - imagine how you will feel in five years time when you drive past that well located inner city apartment that has increased substantially in value; also you could do a cosmetic reno to increase the rental return; also if you need an amazing property manager who gets top rent for my Brissy apartments call Russell Peter from Pure Rentals - he can appraise your apartment and discuss current market rent as well; hope this helps Renee  

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I don't have an answer for you but just a few questions:

Is the property currently for sale? Where has the "offer" come from.
Is the property in Kedron or 4120 - aren't they two different suburbs north and south of brisbane?  

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Does this unit have an major issues, ie. stairs that need replacing, roof needing replacing?

It sounds very cheap and 18 months ago we inspected two in the same block that had about $120K worth of stairs/roof/railings work that had to be done.

At the time it was the cheapest unit in Kedron. I'm just wondering if it is the same one?  

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Jason Star said: ↑
Hello,

I need some advice on my investment unit located in Kedron, QLD, 4120. It's a small 2 bedroom and completely unrenovated. I paid $260,000 for it 2 years ago.

The reason I want to sell is because it's costing me way too much to keep. The rental income is $210 weekly. It costs me about $2000 a month to keep/maintain including the mortgage payment.

I have been offered $235,000 for it. My mortgage is $235,000. If I accept this deal I will still owe approx. $7000 on the mortgage and $7000 in body corporate fee's.

If I sold for this amount my total debts would be approx. $21,000.

The interest on the mortgage is about 6.5%
The interest on the body corporate is 0%
The interest on my credit card is 9.5% (I owe $4000)
The interest on the remaining amounts is 0%

If I hold on to the unit I will be forced to pay about another $6500 in body corporate fee's in approx. 1 - 2 years.

Should I sell the unit for $235,000 and cut my losses? I would have lost about $40,000 in total and still owe $21,000.

Help! JasonClick to expand...

odd > sanity check here pls

Mortgage 15500 per year
BC 3500 per year
Council 2000 per year
WAter 1000 per year

= 22 000

Nett rent after mgt = 10 000

Gross loss 10 000

Tax dedn ?? say 20 %


8000 a year to hold

if it is costing u 20 k to hold then

Youd need 9 % pa per year just to break even and logic would dictate you look at selling

Common sense though says look at the numbers.

Is ur mortgage IO

Do u have a tax variation in place


Are you struggling financially or is this an emotional thing ?

ta

rolf  

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If you take a loss, at least you would get some tax back. From the sounds of it, every month you hold the property you are moving backwards.

Have you looked into selling it under a "wrap" agreement, aka vendor finance. This is where you provide finance to someone else to get into the property at above market rate (typically 1-2% above Standard Variable Rate) and they pay all the outgoings, (insurance, rates, strata, water etc).

Normally you can charge a slightly above market price to a buyer who has a minimal deposit, like just the first home buyers grant, or to those that have good cashflow but don't fit standard bank lending criteria / have a bad credit history etc.

The purchaser under the wrap agreement could do renovations to improve the value of the property and eventually refinance through normal channels. In the interim you stop bleeding, turning it to cashflow positive, get a sale above current market value, with no agents fees and a cash deposit to pay off the credit cards.

I have done this in VIC before, where the purchaser was able to defer the stamp duty until they actually settle on the property and take title when they refinance. You would need to check how it would work in QLD though.

Hope this helps!

Cheers,
Matt  

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As Matt says a creative deal would be an option, there appears to be a large demand for this type of deal and I have seen it work well in lots of different price ranges and turn -ve cashflow into +ve, you are capping your upside and still have downside risk but can turn around your cashflow is the trade off.

Yield is very low. Working off 5.2% gross yield as a rough benchmark for property around this area, asks 260k rents 260 wk with variations more or less based on specifics. Are there ongoing condition issues with the building and sinking fund balance?  

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How do you the market In Brisbane has bottomed? What do you think is the driver for an upward price trend in Brisbane?

How do you know it wont fall further?

Jason, if i was you, i would try to sell it and cover my costs. Say ask $245k and accept 242k or something.

rchad said: ↑
The Brisbane market is at the bottom presently and is due to move upward; is it possible to hang on to not miss out on the upcoming capital growth?Click to expand...
 

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rchad said: ↑
Have you spoken to your accountant about completing an Income Tax Variation Form to increase your cash flow? (our accountant charges about $110 for this service) and it puts a lot of extra cash in your pocket each week;Click to expand...
Or you can do it yourself free, online at the ATO website. Takes a while to get all the info if you're not organised (which you'd have to do for the acct anyhow), but the form itself generally takes not more than half an hour at the absolute most.  

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rchad said: ↑
The Brisbane market is at the bottom presently and is due to move upward; is it possible to hang on to not miss out on the upcoming capital growth?Click to expand...
I,m still unsure about that, the last time Brisbane went on the slide it took several years to come back and inbetween so many went too the wall,from 1991 up till 1998,it was flat as a pancake,from 1998 with massive advertising by sideshow get-rich-quick spruikers it has been going ganbusters then hit the wall over 2 yeras ago imho,that's why it always pays to beware of the left side of any government because they always mistrust property investors because they represent indepdence and free thinking,if it was me sell and put the loss into experience for the next time
imho..good luck..  

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It's a two bedroom now.
Rent out each bedroom separately.
If possible, enclose the loungroom to make a third bedroom.

Mattnz also gave a great idea concerning wraps.

We do something similar, but ours are Options, and the tenant never builds up any equity in the property. They pay a downpayment and a monthly Option, on top of market rent. After 2 years they must get finance. If they decide not to buy, we keep downpayment and Option as rent.
Tenant is responsible for all maintenace and repairs. any improvements remain with the property, without compensation,if they decide not to buy.

Don't be too quick to lose money and sell.
You knew when you bought the place, it was NG.  

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Hi Jason,

I agree with some of the others. You should look into vendor finance with a lease option for example. I just completed one in Zillmere in similar circumstances. I had a cashflow negative property (-$280/mth) that I would have had to spend approx $10-15k if I wanted to sell it for a reasonable price in this market. BUT instead I sold it with a lease option and turned it into a positive cashflow of $720/month & I now don't have to spend any money on renos, no rates, no maintenance etc. It is a fantastic option in this market and that will completely turn your situation around.

All the best
Matt  

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If you want to find out more about wrapping as a strategy, there is a best selling book by Steve McKnight, 0 to 130 properties in 3.5 years that is a must read. It should be at any decent sized book store.  

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I'd really be curious to know if it is the one we saw about the same time you bought it? Did it have stairs that were condemned by BCC?

Jus curious. I know those would be fixed now as there was a deadline and apart from that I thought there was potential.  

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There appears to be a sale in the complex for 235 from recent months of a renovated unit.

Would guess the upgrade plans for the ballustrades haven't gone through if there's a significant charge on the way? If so a lot of buyers might not notice those charges unless they are requesting B/C record searches.

Would be asking the agent why your property is worth more than the renovated sale from 2011? Could be a good reason that isn't obvious from a quick scan through RP data.  

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wylie said: ↑
Does this unit have an major issues, ie. stairs that need replacing, roof needing replacing?

It sounds very cheap and 18 months ago we inspected two in the same block that had about $120K worth of stairs/roof/railings work that had to be done.

At the time it was the cheapest unit in Kedron. I'm just wondering if it is the same one?Click to expand...
Hello, yes... sadly the very same unit with the roof and stairs problem! I'm the idiot that bought it! When I did the inspection not one single person told me about the roof or stairs and any pending BCC fines/issues... Is that even legal!?

Now, it's turned into a total mess and I'm struggling with all the costs on a single income. I had an offer for $235,000 and am thinking about accepting it and walking away.

Jason  

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Andrew_A said: ↑
There appears to be a sale in the complex for 235 from recent months of a renovated unit.

Would guess the upgrade plans for the ballustrades haven't gone through if there's a significant charge on the way? If so a lot of buyers might not notice those charges unless they are requesting B/C record searches.

Would be asking the agent why your property is worth more than the renovated sale from 2011? Could be a good reason that isn't obvious from a quick scan through RP data.Click to expand...
When I bought my unit 2 years ago there was another fully renovated unit in the very same complex that was also for sale. When I asked about it the Agent told me that it had already sold for $310,000, which as it turns out was a complete lie.

Back in October 2011 another unit, also unrenovated, sold for $235K. The unit is in a much better condition than mine and I was offered the same price.  

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Jason Star said: ↑
Hello, yes... sadly the very same unit with the roof and stairs problem! I'm the idiot that bought it! When I did the inspection not one single person told me about the roof or stairs and any pending BCC fines/issues... Is that even legal!?

Now, it's turned into a total mess and I'm struggling with all the costs on a single income. I had an offer for $235,000 and am thinking about accepting it and walking away.

JasonClick to expand...

Warning... long post.

We were looking about October 2010 when two in the building were for sale. Yours was $235K (ish) and the renovated one was $260K (ish).

I thought it could have been that one because at the time it was the only one that cheap. Don't beat yourself up or call yourself an idiot. To be honest, at the time we looked two were for sale in the block which made me smell a bit of a rat, and I said to the agent "there are two in this block for sale, is there something wrong?" He then told me that the stairs were condemned and the BC had until 25 December to replace them or face a $800K fine. That focused our attention :eek:.

We still went to look, because at that entry price, I think from memory two sets of stairs and a new roof were going to cost each unit $30K. It still made good sense because the units were still pretty cheap.

It didn't turn us off completely and we decided to at least inspect them. The stairs were taped up and we had to use the back stairs which I think were also needing to be replaced but not as urgently. The railings were also not high enough for current building code but that is not uncommon in units that age and AFAIK wasn't something that needed to be updated, whereas the steps had a deadline.

If the agent didn't tell you, did you find out prior to settlement?

The unit itself was tired, needed a new kitchen and updated bathroom, and the living room was tiny, but again, for the price that was all we expected to get for such a cheapie.

My son was going to live in this and we really only decided against it because if the stairs were not fixed in time, then he was taking on the risk of BCC fining him $100K ($800K - 8 units from memory). So, that was our main concern, but being so tiny and with the entries off one long balcony meaning no privacy, and needing so much TLC we decided against it.

So... please don't think yourself an idiot. Probably most of us on this forum have made mistakes. We certainly have. Now... how to minimise the damage?

Have the steps been replaced? I'm assuming so because it was only three or four weeks before the deadline that we inspected it. What about the back steps, and the roof?

The other unit that was "renovated" and looked so much nicer on the net was for sale for $260K or so from memory, and there was something about that seller offering to "refund" $20K (from memory) after the contract was signed at the higher price.

I also recall that the one you bought (I think) had issues and the BC fees hadn't been paid for the past year or two, which also made us very wary.

It was wrong that the agent didn't tell me about the fairly major issues until I asked. I would be seeing the Caxton Street Legal Centre to find out where you stand legally on that. They are now at South Brisbane (1 Manning Street South Brisbane 3214 6333). My understanding is that once an agent knows something detrimental, he/she is obliged by law to disclose it. Why not also check with Consumer Affairs (or whoever looks after that sort of thing) whether it is worth pursuing this angle?

It probably would cost you more to pursue it legally, but if you managed to print the advert or have some proof that this was never disclosed to you, you might have a case. We did discuss at the time whether this agent was planning on telling us about the pending cost to rectify these issues. We don't think he planned on doing so, but we'll never know.

I wonder if you can somehow get copies of the advert. I know it didn't mention the major issues, and maybe that is okay as long as the agent tells you before you sign a contract, but if he didn't then I think you have a case.

My other question (sorry for the long post) is have you renovated the unit at all? Have the stairs been fixed? What about the roof? I'm just wondering if those major things have been fixed, whether it might be valued higher now and whether you are better to hold on for longer, rent it for a bit longer and wait for things to improve. If they have indeed been fixed, it might just take some time for the stigma of being that "dodgy" block of units to pass.

What sort of repayments and what sort of rent?

I'm also wondering if you can hold on a bit longer, it is in such a good area, and the transport building chaos (at least when we looked at it) nearby, should make this area even more attractive.  

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hi Jason

Are you self managing the property $210pw sounds well below the market for the area. please give me a call 0406 743 965 or PM me to discuss if you want me to do a rental valuation on the property

the cheapest 2 bedroom in your area is currently advertised renting fro $300pw

http://www.realestate.com.au/rent/p...between-0-300-in-kedron,+qld+4031;+/gallery-1
.

$90pw X 52 = $4680 would make things easier  

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Researchers and data indicates it is at the bottom; I think it will start to move upwards steadily; not a huge upsurge as we have seen in previous years  

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