how is this property doing?

[eeew]

Hi
I bought a 3+2+1 fairly large apartment in southbank vic in '06.
It was bought for 410k.

Current valuations: 660k

should i sell or hold on for a few more years? i have paid off a small part of the bank loan, but enough for the sale equity to exceed 300k if i do sell now.

My salary is 6 figures so i dont need the cash asap, but certainly would be nice to have it.

 

[mary&mat]

Hi eeew,

Welcome! Nice purchase

I guess the answer the whether to sell or not rests with your investing goals & your lifestyle choices.

When you bought the apartment were you planning to build a property portfolio? Were you after CG? How much does it cost you to hold the property each year?

What do you intend doing with the money if you sell?

Regards,
M&M

 

[Wunderbar]

Good on you. I'm guessing you're pretty much positively geared on the property. It really depends on your age - I would prefer to keep the apartment for cashflow and use that income to buy something else or invest in shares. If you negative gear you run into the asset-rich cash-poor problem very quickly

 

[buzzlightyear]

If you sell, what would you be doing with the proceeds?

 

[BuildingBlocks]

As the rest have said, what will you do with the money if you sell?

No point in selling just because it has made some money. That is usually a reason to keep something

 

[eeew]

the reason i am pondering selling is that i am interstate ( and will be here for the next 2 yrs at least). If i do sell, i wont have to worry about it and i can break all ties. I am looking to simplify my life. I also like the idea of crystallising my gains- who knows what will happen in a few yrs time....the market could crash for all i know...i am virtually assured of the 300k gross equity upon sale at this point in time if i sell.

It is currently rented out and the rental yields are strong, but not specatular.

As for the proceeds if i do sell, i plan to give a lot to my folks to finance their retirement (which will happen in a few yrs time). I plan to keep about 1/3rd of proceeds for myself. might re-invest back in the property market, might put some in stocks, etc but not sure. Id like cash in the bank as it allows me freedom to make decisions in my own time.

However, it should be noted that a major benefit of the property has been the forced savings- i would have splurged if it had not been on the mortgage....gotta thank the bank here ( thought id never say that.

So, there are pros and cons of me selling now vs holding off for a few more yrs. I guess a lot depends on how the area of southbank vic will do in the next few yrs.
That is the decision i am trying to make.

 

[Wunderbar]

Since you are positively geared - you can 'fund' your parents' retirement via an income stream anyway (from the apartment's positive cash flow). There's no real need to sell the place just for that purpose unless you intend to buy a house for them or something

 

[Rixter]

If you negative gear you run into the asset-rich cash-poor problem very quickly

Problems are only problems if you don't possess the knowledge to suggest otherwise.

A problem for one person is an opportunity for another.

Food for thought.

 

[Wunderbar]

Problems are only problems if you don't possess the knowledge to suggest otherwise.

A problem for one person is an opportunity for another.

Food for thought.

How is being cash-poor an opportunity? The only way out of that situation is to purchase a high yielding assets to fund future acquisitions. There's no need to be a smart-***

 

[Rixter]

How is being cash-poor an opportunity? The only way out of that situation is to purchase a high yielding assets to fund future acquisitions.

For you it maybe the only way out because that's what your experience and/or belief system paradigms suggest. There are many other ways. It becomes an opportunity to turn the Cash negative around into an investment positive/profit.

There's no need to be a smart-***

All you are doing is displaying your knowledge level. Again comes down to beliefs systems. Change your paradigms and you will change your world.

Food for thought.

Anyway I dont want to hijack this thread. If you require further clarification feel free to pm.

 

[eeew]

staying on the topic, do you think that the apartment market in southbank vic will continue to see capital gains over the next few years? I realise its all a bit crystall ball stuff, but im trying to gather as much info as possible to make some decisions.
One suggestion has been to hold off selling and use the rental returns to acheive my other objectives. Fair point, and ill consider doing that. I would probably rather just prefer to sell and get the money and distribute it as i see fit ( much cleaner option).
Most likely, since i do not own any other property, it looks like ill have to buy again in the future. It wont be in the same location though. Quite a bit of uncertainty at the moment and thats another reason why i want to sell.
What i think: the market in southbank vic will see average growth ( 2-4 %) for the next year at least. Higher growth in subsequent years. Hold off selling for 3 yrs, then sell, cut off ties, wipe your hands clean and ride off into the sunset on your horse with gold in the napsack (as seen in the movies- old movies though).

Use the money then to distrribute as see fit and re-enter the property market at that time (who knows where i will be in 3 yrs time- i certainly dont).

By then, ill be mid 30's, cash in the bank, folks all set, and hopefully a large salary to see me through operational expenses. only one problem: kids.......oh well...so much for my dream.

 

[boiselfish]

Have you factored in CGT?

 

[Rixter]

Eeew, have you thought about keeping the investment and borrowing against it for whatever you have planned for the future?..that way you are not up for selling costs, triggering cgt, reducing your exposure to the market and missing out on future capital gains.

 

[Property Meister]

staying on the topic, do you think that the apartment market in southbank vic will continue to see capital gains over the next few years? I realise its all a bit crystall ball stuff, but im trying to gather as much info as possible to make some decisions.
One suggestion has been to hold off selling and use the rental returns to acheive my other objectives. Fair point, and ill consider doing that. I would probably rather just prefer to sell and get the money and distribute it as i see fit ( much cleaner option).
Most likely, since i do not own any other property, it looks like ill have to buy again in the future. It wont be in the same location though. Quite a bit of uncertainty at the moment and thats another reason why i want to sell.
What i think: the market in southbank vic will see average growth ( 2-4 %) for the next year at least. Higher growth in subsequent years. Hold off selling for 3 yrs, then sell, cut off ties, wipe your hands clean and ride off into the sunset on your horse with gold in the napsack (as seen in the movies- old movies though).

Use the money then to distrribute as see fit and re-enter the property market at that time (who knows where i will be in 3 yrs time- i certainly dont).

By then, ill be mid 30's, cash in the bank, folks all set, and hopefully a large salary to see me through operational expenses. only one problem: kids.......oh well...so much for my dream.

i m not a crystal ball but ive heard on numerous occassions that the inner city apartment market is probably not the best market to get into in the next few years, due to severe over supply currently and in the future with gazillion OTP apartments going up.

 

[Wunderbar]

You're right there - but it depends on what/where you buy. If you own a shoe-box 40-50sqm apartment then of course that is true. But if you own boutique developments you shouldn't have a problem.

 

[eeew]

yes, i agree- i thought about selling immediately given the gazillions of new apartments comming on line ( and even OTP) in the area.

Supply isnt always a bad thing. The new apartment companies perform aggressive marketing to not only their buildings but also the area, thus raising the appeal of the area. Who can benefitv from that? me.

Intitally the oversupply will put a cap on price growth, but in 2-3 yrs, the cap gain growth will surface more strongly based on the increased appeal of the area and the reduced land available. So, i either sell now and bypass the oversupply issues or wait a few yrs for the extra supply to be absorbed. I think ill wait it out.

Besides, my apartment has plenty of differentiating factors than the multitude of new ones. One is that you simply will not get an apartment of this size and utility in this area for this price- competing on value. Comparable newer ones in the area go for about 200k more than mine! For a lot of people, they would happily purchase a 200k cheaper apartment ( albeit a little older and a bit less quality than new ones) rather than go for a spanking new expensive-a$$ joint.

Cant take away one thing: location; and thats primarilly driven capital growth.

 

[Wunderbar]

Having said that - I find southbank a bit 'out of the way'. There's not much there apart from Crown. But that's my personal opinion

 

[eeew]

I always though the prime location was a real driver of growth- the market seems to think so. I agree that further areas of southbank can feel a bit removed ( but then they are also quieter- which has its own appeal). Those closer to the city are more convenient if you ask me. What the area really lacks is a large supermarket such as coles/wollies etc. True you could just go around the corner to south melb for that, but i'd prefer something in the postcode instead of small retail shops.

 

[buzzlightyear]

I always though the prime location was a real driver of growth- the market seems to think so. I agree that further areas of southbank can feel a bit removed ( but then they are also quieter- which has its own appeal). Those closer to the city are more convenient if you ask me. What the area really lacks is a large supermarket such as coles/wollies etc. True you could just go around the corner to south melb for that, but i'd prefer something in the postcode instead of small retail shops.

There's a IGA on Park Street and another on St Kilda Rd.

 

[Melbournian]

the reason i am pondering selling is that i am interstate ( and will be here for the next 2 yrs at least). If i do sell, i wont have to worry about it and i can break all ties. I am looking to simplify my life. I also like the idea of crystallising my gains- who knows what will happen in a few yrs time....the market could crash for all i know...i am virtually assured of the 300k gross equity upon sale at this point in time if i sell.

It is currently rented out and the rental yields are strong, but not specatular.

As for the proceeds if i do sell, i plan to give a lot to my folks to finance their retirement (which will happen in a few yrs time). I plan to keep about 1/3rd of proceeds for myself. might re-invest back in the property market, might put some in stocks, etc but not sure. Id like cash in the bank as it allows me freedom to make decisions in my own time.

However, it should be noted that a major benefit of the property has been the forced savings- i would have splurged if it had not been on the mortgage....gotta thank the bank here ( thought id never say that.

So, there are pros and cons of me selling now vs holding off for a few more yrs. I guess a lot depends on how the area of southbank vic will do in the next few yrs.
That is the decision i am trying to make.

I know southbank or south melbourne apartments very well. Whereabouts is it? if i can view it or know the size and address- i might even buy it from you.