Reasons for selling

digs75

digs75

I am interested to find out why investors have decided to sell their property in the past ?

I am in a dilemma as whilst my property has grown at an average 7% the past 6 years , the holding costs keep increasing. Strata costs rose 140% start of last year and set to increase further this year.

This is due to some major works to the property that seems to be neglected in the past.

So have you ever sold due to strata fees that keep going up ?

40 year old building
Strata $1250 p/q
Going up to $2500 at the end of the year
 
digs75 said:
I am interested to find out why investors have decided to sell their property in the past ?
Click to expand...
I impulse sold a strata unit last year. My tenant moved out, the strata manager was very annoying, the property was about to stop being capital gains tax free at sale (PPoR turned IP), prices had risen sharply in the area after years of being flat and there was no comparable properties on the market. I took all of these as signs, listed and got a quick sale. Very happy with my decision. It was a 2x1 and the price I got was the low end of the 3x2 range. There wasn't one factor, it was a combination of all of them together at the same time.
 
Holding cost. Place was falling apart and as a result too much maintenance. When we found out the house needed restumping, that was the final straw.
 
Sold a property due to maintenance issues. 40+ years old. Could not see any value putting more money into it. Had it for 7 years so worked out ok with capital gains.
 
We started out with a couple of single bed apartments, both which we renovated and then leased. One was an extensive reno, the other cosmetic only. We sold both of them at the top of the market as we had just started to move into two bedroom properties. Also one of the apartments was in a very large complex which was horribly badly managed.

We were extremely fortunate with when we sold - the market was just peaking and we got top dollar for both of them. That was four or so years ago and having just checked on realestate.com.au, single bed apartments still aren't selling at that price now.
 
digs75 said:
I am interested to find out why investors have decided to sell their property in the past ?

I am in a dilemma as whilst my property has grown at an average 7% the past 6 years , the holding costs keep increasing. Strata costs rose 140% start of last year and set to increase further this year.

This is due to some major works to the property that seems to be neglected in the past.

So have you ever sold due to strata fees that keep going up ?

40 year old building
Strata $1250 p/q
Going up to $2500 at the end of the year
Click to expand...
We have only ever sold IP's due to cash flow concerns.
 
If an IP is burning a hole in your pocket, or it has a location defect that will limit its growth potential, then cash it in and replace it with something better (pos cash flow or good location). This is the market to do it in, because anything will sell, at big freight and quickly. Waiting another year or so will put you back in the conventional slower markets where buyers wield the power.
 
I have a property in Orange I bought about 8 years ago purchase price 160k it is probably only worth 200k today so very slow growth trying to decide wether to let this one go I am getting over market rent for it $295pw to a government run institution so is paying for it self ,not to sure if it will preform via capital growth for a few more years yet,would like some of your views on this situation thanks what would most do sell or hold longer.
Macca446
 
Haven't sold any yet, all mine are older stock also. I had a special levy to pay last year that doubled the strata fees for that IP for last year, but 9% growth and a revalue more than set my mind at ease.

I think in your example 7% growth P.A sustained growth for several years seems good, and don't see a reason to sell apart from overall cashflow concerns.
 
Haven't sold any yet, all mine are older stock also. I had a special levy to pay last year that doubled the strata fees for that IP for last year, but 9% growth and a revalue more than set my mind at ease.

impala67 said:
I think in your example 7% growth P.A sustained growth for several years seems good, and don't see a reason to sell apart from overall cashflow concerns.
Click to expand...

Just heard from my strata manager that the new strata fees are $2500 p/q, starting next month for 5 years. Apparently to pay off a $250,000 loan @10% interest rate from the bank for financing a maintenance program....

My heart sank today hearing the news :(. I think this would put off potential buyers when they see these figures as well.....at least it is a sellers market though for now :)
 
Good thread

There are a few reasons why I want to sell.

I'll be selling my 41 sqm unit this year or next year.

pro's

It has a good rental yield. Loan $200 k, renting for 290 per week. Its not costing me much to hold it.

Always in demand by tenants as its affordable and 7 km from the cbd. Also in a great location.


con's
The CG has not been very good. I bought it in 2009 and its only gone up about $30 k.

Although in 1991 these units were selling for $40 k. 2001 still selling for $40 k. Then the 2004 boom hit and they shot up to the high $190's. I cant see another boom approaching though. I only see very low/modarate growth. If I had bought a villa across the road my i'd have made $80 k equity. I'm hoping my little ip will rise in value soon as all the other properties have last year.


Its an old 60's building so i'm thinking there will be maintenance/repairs expenses in the future.

The size is just too small which limits CG. The building is mostly owned by investors and I want something that has a mixture of investors and owner occupiers

This time I'll buy something larger and with better CG prospects. The other reason I want to sell is so I'll have less non deductable debt on my ppor. If/When i can sell it for a $60 k profit i'll sell it. Currently i'd only make around $30 - $40 k profit. I'm hoping come spring this year would be a good time to sell as the agent recommended. Its the right time in Perth to be selling i think.


It is a bit of a dilemma though. One part of me wants to keep this property as it doesnt cost much to hold. The other wants to sell and re-invest in something with greater CG potential and less maintenance/repair issues. I think I'll sell it. I'll have less ppor mortgage that way and more sanf.

What would you do? Would you sell it ? Can you think of any more pro's and con's ? I see more con's than pro's for keeping it.
 
I'm going to sell one of my Gwelup villas for a few reasons:

1. market is doing well and I want to capitalise on that and selling brand new is better than almost new
2. to fund my 'retirement'
3. to reduce some debt

If number 1 wasn't happening I'd probably be keeping it as the rent pays the mortgage on it but the market is strong and so I'll reduce some risk.
 
I sold a unit in the eastern suburbs last year. The owners put in a claim for water penetration issues and after the remediation project our unit still had water issues. Property was our best in terms of location and potential growth but rents were held back due to mould issues and with the influx of new owners I was waiting for a hefty special levy to be struck. Still sad we had to let it go but it had to be done
 
We sold our former PPOR few months ago.

It was cashflow positive, had seen very strong capital gains and a well located property with future price and rent increase potential.

The reasons for selling are
1. It is a duplex half with no room to build a GF.
2. The loan had been contaminated thus less deductibility
3. Unable to get a realistic bank valuation thus was unable to access extra equity.
4. I was confident that by selling and buying again, we will make more gains. (Better usage of equity)

So we sold it 10% more than bank valuation. Bought 2 properties using the equity. These 2 new properties will get 10% equity gain with some basic Reno.
 
Tulamalula said:
What do you mean the loan had been contaminated?
Click to expand...

I got my salary paid directly into loan account, used credit card to make payments and then paid off credit card monthly by drawing from loan :mad:

We did save some interest and it was fine when it was the PPOR. But When it became an IP, the loan was already contaminated. So we sold soon.
 
whenever I have sold it has been a combination of to reduce debt and to take advantage of another opportunity.

Vicious circle - ooh money in bank/need good debt/need to reduce debt/ooh money in bank
 
You must log in or register to reply here.

Similar threads

C
Strata title on a duplex
Replies
0
Views
2K
CARCNS
C
C
HELP - strata report, historical building defects
Replies
3
Views
986
Cydneys
C
see_change
How many Properties in a Trust in Q'land
Replies
15
Views
6K
see_change
see_change
P
When it is Townsvilles Turn
Replies
19
Views
3K
strongy1986
S
N
Property Investing Mentors to help get a strong start
2
Replies
21
Views
8K
Rixter
Rixter
Back
Top