No interest! Would you hold, sell VF???

Discussion in 'Property Management' started by ChrisA1, 18th Aug, 2013.

  1. ChrisA1

    ChrisA1 Member

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    Hi all

    Due to the oversupply of rentals in the current Canberra market, I am having difficulties renting my 1-br unit (7 weeks and counting…. others have been advertised for longer). The PM is great and we are doing all we can to keep the interest – lowering rent ($40/week and lowering), sweetners, twice weekly viewings, now is just not a good time for rental properties in Canberra.

    I have been thinking for the past 8 months or so at offloading this property, as I feel I could use the funds better in other markets (lesson here is to research, then make the plunge – don’t keep analysing until you have missed the boat! :eek:). Again, the trouble is that even house prices are a little depressed and properties are taking longer to sell (I have seen properties advertised for up to 8 months). I am also looking at vendor financing to tap into a market that is otherwise not accessible.


    My question is what would you do here? Hold the property hoping that it is rented soon and the market picks up in the coming months/years? Sell? (based on previous sales prices, I wouldn’t be taking a loss on the actual sales price, it will be a few months or so before it sells based on current market conditions – holding costs)? Vendor Finance to capture this market?


    If you subscribe to the ‘never sell’ line of thinking, I would be interested in your comments as I consider that you own a property while it is benefiting you, and once it has done it’s job, or if better money can be made in other markets, then it is time to sell. I would be interested what you would do in this situation where it is taking a little while to rent.

    Interested in your comments/discussion.
     
  2. esh

    esh Member

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    What's the condition of your property ? If Reno is needed maybe this would help make your property stand out- if you don't want to sell
     
  3. Ausprop

    Ausprop Member

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    may be better to draw the equity out to buy in another market? I am not a fan of selling and in this low IR environment you shouldnt be under much pressure to do so other than the dead equity in the property
     
  4. Ace in the Hole

    Ace in the Hole Don't compete, Dominate !

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    Everyone's situation is different.
    Personally, being an accumulator and long term holder, I'd meet the market rent and continue to hold.
     
  5. Nemo30

    Nemo30 Member

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    The market isn't going to pick up any time soon.

    If anything it is going to get worse - we have some big job cuts about to hit us. This has already started in some Govt Departments. Dept Health announced during the week it was cutting 400 jobs.

    Potential change of Govt and many more jobs gone.

    I'd say Canberra has a few bad years in front of it.
     
  6. ChrisA1

    ChrisA1 Member

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    Many thanks for the comments.

    The unit is only 6 years old, so no reno potential. I am wary of pulling equity out as based on the current market sales prices, I feel that there won't be too much equity to pull out (only about $25K) and will put the property into a -ve gearing position (based on last year's figures it was just +vely geared - it will slip back into a neutral – slight -ve gearing position based on proposed rental rates).

    It would be –vely geared for a few years unless a real trick was pulled out of the bag and Canberra steamed again. I don’t like holding a –vely geared property without knowing how it was going to get out of that position (eg I could handle a small period of –ve gearing if I purposefully bought a property based on news of projects etc in the area).


    Ace, I'm interested what your strategy would be for holding - do you hold regardless of how the market is performing (e.g. dropping $40-60 or so per week just to get it rented), when would you sell, do you have triggers? I am curious about this approach and could certainly learn something here if you wouldn't mind sharing. I could continue to hold, but since I am wary about pulling equity out, I am not sure why I would, other than hoping for the next boom period.

    If the hill could get themselves sorted out, property will start chugging again, but could this just be crystal ball gazing and how long will we be in the current slow cycle??
     
  7. Ed Barton

    Ed Barton Advance Australia fair

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    Why don't you post up a link to the rental ad? However don't bother if you are going to ignore comments of at least a dozen posters about pics like another here recently.
     
  8. Mooze

    Mooze Member

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    We're in similar position - tenants will be moving out Sept 16th, not in a position to reno lightly (would love to even just give it a paint but with our first bubs due Sept 2nd just not good timing!).
    We'll drop rent and hold. Long term we see the prospects for our property as good (700+ corner block just outside the current Core Zone for a good suburb). This is just part of the cycle of Canberra - unlike the rest of the country it works to election and change of govt. and my experience was also more likely to over react to negative economic news (worked a treat last time for us as we bought in a major short term (few weeks) dip).

    A lot of departments have already started their kill and fill's - doesn't matter who gets in PS is going to get a big haircut this time around. Six months down the track they'll be back as contractors, twelve months permies (to fill the PSC redundancy criteria).
     
  9. 13andcounting

    13andcounting Member

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    We've just put our place on the market in Canberra actually. We've been particularly lucky with our "time in the market" and are looking to lock in the capital gains.

    A lot of discussion in this thread about rentals in Canberra:

    http://somersoft.com/forums/showthread.php?t=89833
     
  10. ChrisA1

    ChrisA1 Member

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  11. ChrisA1

    ChrisA1 Member

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    Many thanks for the link 13andcounting. I read the post a little while ago and re-reading it now, reminded me why I am looking to sell, and that's because of the larger number of units that will come onto the market over the coming months - year :eek:

    Half of me is saying 'it's cyclical, hold on, it will come around', the other half is saying 'get out now, before the apartments run you over!!!' Now I'm just confusing myself....:rolleyes:
     
  12. ChrisA1

    ChrisA1 Member

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    Yep, and it's this half of me that's saying hold on, it'll come round. Just wondering what the surge of new apartments would do to the market??
     
  13. 13andcounting

    13andcounting Member

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    My best guess is that the surge of new apartment stock will do the opposite of what the bushfires did...

    Does anyone have any figures on how many units are going to be coming onto the market over the next few years?
     
  14. natmarie73

    natmarie73 Member

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    I'm also in the same situation, albeit with a property in Newman which will probably be empty from December. Luckily I bought a few years ago and can afford to drop the rent a lot, plus am currently locking in equity to see me through. I did think about selling but with the influx of property going on the market up there my gut instinct is to hang on. Equity + neg gearing should get me though and if I get stuck I can always go back to FIFO and double my income.

    Can you afford to hold on to it or do you absolutely HAVE to sell to keep from going under?
     
  15. TheMarket

    TheMarket Member

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    Around extra 1200 new units come on line this year, more development in the pipe line and a few more high rise come on to the market toward the end of this year and more in 2014.
    I say you looking at extra 2000-3000 new units/apartment come on line next few years

    they also open up new development ...on top of Molonglo Valley
    so supply will be here for a while yet

    http://canberratimes.domain.com.au/...0-new-homes-for-gungahlin-20130808-2riyz.html

    Part of ACT government affordable housing strategy to flood the market with supply ....work or not we find out in a few years....
     
  16. ChrisA1

    ChrisA1 Member

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    I don't have to sell but 7 weeks and counting and the new apartments coming onto the market is making me decide whether to bite the bullet now, or see what the crystal ball holds.... Market's comment about the ACT government's affordable housing strategy says it all....
     
  17. TheMarket

    TheMarket Member

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    Wise move ...not many people pay attention to capital preservation

    I seen a few paper millionaires in my time :) and when it came undone they regret not taking money off the table when they can...

    Having learned from other mistakes I always preserve my capital...I may not make as much if thing go extremely well but I never ever go backward in term of capital I acquired
     
  18. TheMarket

    TheMarket Member

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    http://www.macrobusiness.com.au/2013/04/canberra-unit-glut-hits-landlords/
     
  19. 13andcounting

    13andcounting Member

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    Shame there isn't any other way to lock in the gains - anyone want to write a put option for me to buy? Strike price 10% below current bank valuation, one or two years to expiry?

    If I get a reasonable offer before the election I'll be grabbing it. Although the "uncertainty" is a problem at the moment, I can't imagine either of the "certainties" are going to be particularly good for Canberra after 7 September.
     
  20. TheMarket

    TheMarket Member

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    If you know your business and your stocks ....stock market is great for put and call options...I am not talking trading options but a unique way to collect premium with time ....

    I do it all the time in the stock market -:) 3% every 3 months doing it for years ...collect a few thousand bucks of premium every few months ...

    Obviously it comes with risk if the stock tanks but knowing your business and your stocks it comes with little risk and high return. Just like anything in life if you know your market you can make good return with smaller risk.

    I do to housing and properties if there is a proper market for it ...a regulated exchange'where the counter parties cant renegate on their contracts...

    With the ASX I know I always get my money if the contract is made..and if the other party do a runner the exchange will chase them and I get my money regards of the outcome because the exchange always pay on the settlement date...what happen afterward with counter parties is none of my concern...

    Housing you have to sue someone and the winner is lawyers -:)