Not happy with PPOR unit after 6 months

Discussion in 'Property Investment - Other' started by MightyWill, 8th Jan, 2015.

  1. MightyWill

    MightyWill MightyWill

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    Hi all and happy new year!!!

    I've been thinking about posting this post for the past two months, so I have finally got off my *** to do so.

    My issue is this, I have had this place since mid last year and was thinking of either selling it after 12 months or renting it out after 12 months. If I sell it, it's to buy something better and learn from my mistakes and experience in living in a high rise unit for the first time. No CGT after 12 months.

    My issues: no air con can be installed in the main bedroom and it gets rather hot during summer/spring and no air circulation even with the bedroom door open. Unit is near a main highway so a lot of ambient noise, so I cannot leave the window open at night. Plus the fact that every time I open the window, I get cigarette smoke smell coming in from some other unit. Possibly from below if smoke rises. If my window had a balcony outside of it, then the smoke would not hit my window, so get a main bedroom with balcony instead of a window in future.

    The second most annoying issue is the foot stomping noise I hear from above, someone?s build in wardrobe door sliding and just regular thumbing noise like someone just slammed the door or moving items around. I've stayed over at friend's units long enough before and never heard such noises, so I must be just in a very unlucky unit where people above or above and adjacent to me are just noisy. The noises cause a lot of stress for me and I can't relax. Sometimes I can on my ceiling to let them know. I wonder if they can hear that from me banging below?

    I'm in the process to get access the above and lower floor so I can listen for the noise on their floor when it happens in the common area outside the lift. I need to be 100% on who?s making noise and heavy walking so I can make a complaint. I've tried talking to a couple of units above, one started to say I was harassing them and the noise isn?t then, the other I left my number with and they never called me back. Building manager is suggesting we talk to the agent to talk to the landlord above to have carpets replaced. The underlay is 10 years old above and its pretty much gone, so it?s like carpet on concrete.

    I have a good feeling I can sell for what I paid plus the stamp duty on top plus agent fees if I sell mid 2015. This would mean I would come back to where I was in terms of cash flow and start again on another place. This time I know what to look out for.

    The other option is to hold on to it, rent somewhere else that is cheaper in hope the property will increase further in value in a few years time. However, I am on the side of view that prices will remain stable over the next 3 to 5 years and a possible correction across Sydney if things change in China. Why China, there is a decent percentage of units owned by overseas investors from China. If the real estate market looks brighter in China in the years to come, they will sell here and buy back in their land. I was in China 2 months ago; a lot of new high rises going up. Most are not selling for a reason but when than reason goes, they will buy back in their land and let go what they have here.

    The other driving factor for sale after 12 months is the condition. I just renovated the place so it looks new. It will be very attractive for buyers wanting to occupy it. I rent it out for a couple of years and I?m sure the place will look as old as it looked when I bought it.

    The final driving factor for sale is the useless large balcony. A lot of wind and dirt lands on the balcony and no privacy even though I am half way up the high rise. Can?t really store anything or put plants on balcony and it will most likely get blown. I feel dirty just standing on the balcony.

    The unit is 9 kms from the city and a 15 min train ride to the city. I?m now starting to think of just buying a house out west near Liverpool district and having more freedom and not worry about noises, etc. It would mean more travel time to work.
     
  2. MsAli

    MsAli www.propertytwins.com.au

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    Hi MightyWill,

    What was your purchase price and what would be the potential rent? What's the potential for the area?

    You don't like living there, doesn't mean a tenant would have an issue..You have spent stamp duty and acquisition costs. Selling would mean agency and other costs and then again spending on stamp duty for the next acquisition..

    Have you done a property report or spoken to an agent on where the prices are? You'd be surprised as prices have certainly moved in the last 6 months.

    MsAli
     
  3. MightyWill

    MightyWill MightyWill

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    I know the market very well in area. What I said was that I could sell for what I paid plus the stamp duty and agent fees on top meaning I get my money back on the stamp and agent fees. I have contact with the previous tenants before I moved in, they seem ok with it all but they were young. I'm just picky and listen out for the noises. Purchase price was 700k and rent would be about 625 to 650 a week. 650 is pushing it but the place is immaculate condition and I've seen others advertised for 650; not sure if they ended up getting 650 a week.

    Would tenants like it if they rented it; probably and if they don't, they are locked in for the agreement. I don't plan to rent it out for a decade if that makes any sense.


    Potential for the area is neutral. Neither good or bad. The only driver for living here is the close proximity to the city and is pretty central to everywhere else. New small shops are opening and another supermarket along with a few new high rises which are sold out.


    My view will most likely be built over in 12 years time; should I worry about that now?
     
  4. Terry_w

    Terry_w Member

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    I think you are mixing up th 50% CGT discount after 12 months. You do not need to live in it for 12 months for it to be exempt from CGT.
     
  5. tobe

    tobe Mortgage Broker

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    but there are some 12 month rules for stamp duty concessions etc.
     
  6. tobe

    tobe Mortgage Broker

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    even if you recoup the stamp duty, selling costs original purchase price and even stamp duty on the next purchase, you are still 'losing' money when you sell, because you are planning to buy back into a similar market. You have lost the opportunity cost for the time you have held that property, and you will now have to buy a similar property for more than what you paid for this one.
     
  7. MightyWill

    MightyWill MightyWill

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    I didn't know this, so what you are saying is because I am owner occupier from day 1 and it's not an IP, it doesn't matter when I sell as I won't incur CGT?
     
  8. MightyWill

    MightyWill MightyWill

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    Your right mate. Let me see if I got it right. You're saying over the past 6 months while I owned this place, I have made no gain because after I sell this, I'm back to square one.

    I understand that I will need to folk out on stamp duty on the next one, but like I said, at least I get it back from when I sell, so I come out break even apart from what you said about gaining nothing over the last 6 months. I guess its more the peace of mind situation and the stress on my back about the noise.
     
  9. luckyone

    luckyone 2 down 8 to go.

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    Precisely!
     
  10. Terry_w

    Terry_w Member

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    Yes, main residences are generally exempt from CGT - unless you have been renting out rooms etc. Confirm with your tax advisor.