In an 'uncomfortable' situation, Help!

[craigb]

my only concern is the rents are usually garenteed because the developers are making up the short fall, say 3k in body corp fee's and to add 85 k as well thats $875 week , so what if the units don't rebound and the return in your rent becomes neg geared , after the two years g,tee.
what is the true rent return , and whats your neg gearing cost going to be, ? in the future, its already $57 wk on body corp, could it be another $200 wk?? i realy don't know , but you should find this out, because others might be accepting anny thing when the 2 year g,tee's is up.

 

[annE]

Hi

I'm with BlueCard and MichaelW - hold on if you can

If it's any help, in the October 2009 newsletter from my real estate agent in Cairns, the principal notes that 'in the past 6 months he has seen the rental vacancies go down from 10% to 2.5% which can only mean an increase in population for the region and the other positive is a dramatic slowdown in new development in both housing and units which will place further pressure on availability and prices over the next 12 months' .

ciao

annE

 

[toony]

- rental g'tee 2 years @ 5.2%
- Price 429k

Its the rental guarantee that worries me. In two years time will you have an additional shortfall.

Is the guaranteed rent now, the same as current market rent? If not, just bear in mind you will have an additional shortfall in 2 yrs time.

 

[Jodie701]

Did you get a depreciation schedule done?
I'm a newbie too and did a similar thing. Bought OTP and it had dropped 10% in value at the time of settlement.
Anyway because a new property has a high depreciation it works out that we are slightly cashflow positive, so I imagine the same would be / could be true for you too ...?

 

[josko]

True, RumpledElf, but it can also work the other way.

In a rising market there are stories of people settling on properties bought OTP and making immediate gains of over $100K. In a previous boom OTP properties on the Gold Coast were changing hands up to 7 times before completion.

In OTP, timing is everything.
Marg

I was such an investor with one of my first IP's. I was fortunate emough to be able to refinance and hold until I could offload it. The BC fees were killing me but I did buy it with the intention to flick it.

novice investor: Here's my little story for what it is worth.

I, like you, did not realise that there would be other novice investors like myself who had the same idea of making a quick buck and selling as soon as the OTP's were finished.

My OTP took 2 years to finish and my val came in over 80k above purchase.

Unfortunately the investors that could not hold their properties sold for 50-80k less than my val. I was forced to hold onto it for 2 years before I was able to offload it. By then the high BC costs had eaten into most of the CG I had made. It was a well learned lesson.

If you can afford it - keep it. Wait for a better time to sell (if you must) and get a reward for your efforts.

In answer to your question about how much to sell it for? What is your LVR and current interest rate?

(If you need to sell- it doesn't matter. The market will determine what you sell it for. You need to get an RP Data report of what the most recent sales have been in your complex - that will give you an idea.)

Regards JO