I know what the knee-jerk reaction is going to be the minute you read "Melbourne CBD", but please bear with me as I lay out the pros and cons of keeping it. Yes I made a mistake buying it a few years ago, but I don't want to rush into making another.
Pros of keeping it:
Cons of keeping it:
What do you guys think?
Pros of keeping it:
- It's a huge 70sqm, warehouse style, 1 bedroom apartment with 3.5m ceilings, not one of those modern dog boxes. It's a beauty. There aren't many apartments like this nowadays.
- The building has 90 apartments in it, mainly owner occupied, and it's tightly held - in the last 3 years, there has been literally 3 sales (I know one of the sellers, she just wanted a sea change), which is almost unheard of in this area!
- Yield is good, I get $420p/w on it, which is again quite rare for a 1 bedder in the CBD in this day and age. I know this will drop as more stock comes online but relative to the competition I expect it to remain above average. People just see this apartment and want it.
- It's in the CBD, not Southbank or Docklands. It's not much of a consolation but it could be worse!
- Lastly, I hit my borrowing limit when I purchased my last house a few weeks ago. This was right before all the latest APRA changes, so this means even if I were to sell this, I would not be able to redeploy the money into another investment anyway. This is possibly the main thing stopping me from really considering a sale right now.
Cons of keeping it:
- Well, I don't have to tell you all - there's a crazy supply problem that's only going to get worse.
- My I/O period ends in 2 years, which means I will likely need to throw more good money after bad when it comes time to refinance. The good thing is it's only 80% LVR so I won't be totally screwed.
- I'd be lucky if I could recover the stamp and sale costs, although this is almost trivial if the CBD apartment market collapses.
- A worse apartment in the same building sold for 20k more than I paid for mine, which really surprised me considering almost everything in the CBD is selling for a huge discount. This could be the best chance I've got to offload it so if I miss the boat I may not get another shot for a while.
What do you guys think?
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