Have to sell..which one though?

O

Ozblonde

Hi Guys,
Im unfortunately in a position where I have to sell a property.
Two accountants have adviced I have to clear some debt due to a now failing
business.
I have the business on the market but no bites.
Its been there for over 20yrs but due to paying too much in buying my ex partner and being left with most of the debt out over 12 months ago and the FGC,Im struggling.
I have 3 properties.
1.PP is a house in Byron area.I have an over draft on the house which I used to buy partner out of business partnership.Prior to buying him out I was debt free on this property,now I have maxed out overdraft at just over $200,000.
2.Investment house.Slightly positve geared.
3.Investment Duplex.Slightly potive geared.
I had to accept a loan of 10% on the duplex as my ex sold one and I wanted to keep the other.
St George so kindly refused to give me a new loan in my own name,even though for years this duplex was positive geared.They claimed had more than(5?) late payments in a year(due to ex not paying his share).I used a local broker,he couldnt get one single bank to refinance me.Ended up with solicitors group to keep the duplex.
Anyway have to sell and concerned about paying capital gains tax.
One accountant said if I sold the investment house it would CGT would be about $50,000.He said sell PP!
He warned me not to be emotional and save the tax.
This guy has never favoured real estate as an investment.
I can let go of my PP(would be very hard),love the house but has a big yard I dont need.
Im concerned that by selling my PP,the house with the most value,Im ripping myself off from the best of all the 3's future gains when and if ever this slump in real estate turns around.
Things are not good in Byron.Real Estate is down..very down.Retailers are closing up shop.Landlords unwilling to help(as usual).

Im not in a good position to retire financially even though its looking like I have to.
Im 55 and have poor health so consider myself unemployable.
Thanks to all
Hope I explained my position well enough for some appreciated feedback.
 
Hi,

It might be worth putting in the value and debt for each property and how much money you need to raise in order for us to get a better feel for your situation.
 
And also rental income on each of the properties. Maybe even the depreciation schedules for them. Then it'll become a numbers game.
 
will do tomorrow,ta
its not about how much I need to raise exactly,its about clearing some debt so I have funds
to trade with(keep my business afloat) and paying less interest with my PP overdraft
 
Value/Debt/Rents

1.PP:Value $650,0000
Debt is over draft $218,000 limit is $220,000.Interest rate 7.2%
Not being rented
2.Investment House:Value $490,00
Debt(interest only)$186,000 @ 7.2% interest - $1284 per month
Rent- $1640 per month
3.Duplex:Value $360,000
Debt $175,000 @ 10% interest- $1486 per month
Rent-$1580 per month

If I decide to keep the duplex Im look to refinance at a reasonable rate,anything but 10%!
These valuations are only guess work based on past sales.
Sadly 2yrs ago these properties would have fetched each approx $100,000 more.
Hope this helps
 
Ozblonde said:
will do tomorrow,ta
its not about how much I need to raise exactly,its about clearing some debt so I have funds
to trade with(keep my business afloat) and paying less interest with my PP overdraft
Click to expand...

is it worth keeping the business afloat? in your first post you said it's failing. is it a dud or just having cash flow problems? maybe you should examine whether the business should be kept afloat.
 
Ozblonde said:
1.PP:Value $650,0000
Debt is over draft $218,000 limit is $220,000.Interest rate 7.2%
Not being rented
2.Investment House:Value $490,00
Debt(interest only)$186,000 @ 7.2% interest - $1284 per month
Rent- $1640 per month
3.Duplex:Value $360,000
Debt $175,000 @ 10% interest- $1486 per month
Rent-$1580 per month

If I decide to keep the duplex Im look to refinance at a reasonable rate,anything but 10%!
These valuations are only guess work based on past sales.
Sadly 2yrs ago these properties would have fetched each approx $100,000 more.
Hope this helps
Click to expand...

if you want to completely clear the OD then it looks like selling the PPOR is the only choice.

if you are happy to just reduce the OD, then given you say it's a tough market atm would it be worth putting all three on the market and seeing which one you get the best offers on?
 
Can't you refinance to lower rates? I'm sure some of the brokers here can help if you give them a call. You can fix them all for good rates for 3/5 years atm.

Consider renting the PPOR and renting a cheap 1 bedroom unit. This will give you a few hundred dollars each week extra cashflow.
 
JWR said:
Can't you refinance to lower rates? I'm sure some of the brokers here can help if you give them a call. You can fix them all for good rates for 3/5 years atm.

Consider renting the PPOR and renting a cheap 1 bedroom unit. This will give you a few hundred dollars each week extra cashflow.
Click to expand...

He indicated he's had some defaults in the past - that's why he is paying such high interest. Besides, at this stage I don't think interest rates are the problem - it is the actual debt itself.
 
You would have to consider the ongoing situation too. If the PPOR debt has been used to buy out the partner then this loan maybe deductible. This may continue even after the business has been closed (in some circumstances). So selling an IP and coping $50k CPT may be wise for 2 reasons: 1. ongoing tax deductions and 2. keeps main residence.

But, having deductions with no income may not help.

Selling the main residence means $400k leftover approx which could be used to put in offset accounts on both remaining properties. Move into 1 and receive good income from the other. No CGT on sale too (prob).

I think just crunch the numbers.
 
Business not a complete dud

The business still has a reasonable turn over.Its cash flow problems.
If the a fair offer came my way,Id sell.I wont walk out just yet.
Im certain I could obtain something for my business because its a 10/10 location.
When partner left,he took every bit of cash he could get his hands on.He destroyed the foundations of the business on his way out,not to mention I had to pay thousands in solicitors fees.
Believe it or not hes trying to set up a shop near me now.My solicitor talked me out of 3yr trade restraint.
Im conerned about my future.Need a cash flow and not able to work(outside of my business) due to health problems.
All I know is somethings got to go.I will be putting 2 places on the market,PP and investment house.
I will refinance if I keep the duplex,waiting to finalise tax.
 
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