Renovating- Sell or Hold??

Discussion in 'Adding Value' started by cnewport, 2nd Apr, 2010.

  1. cnewport

    cnewport Member

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    Hi Guys,

    Im new to the game and have recently finished a full renovation on my first unit in Bondi.

    I am now stuck at the cross road of whether to sell or hold onto it and rent it out.

    I picked up the 2 bd 1 bath 1 car unit for $530k and after stampy duty, legals and renovation costs have spent about $580-585 total.

    After living it in and renovating for the last 6 months it is ripe and ready, i got the same agent back to look at it, and claims that it would likely we would get 700-750k...

    Ive spoken to quite a few people and alot seem to say hold and rent out as that was their strategy. just thought it would get a few more opinions.

    As the gain would be large in quite such a short time, is it worth selling and moving onto the next venture.

    also estimated rent based on comparables and leasing agents would be 740-780 pw.

    chris
     
  2. Propertunity

    Propertunity Real Estate Buyers Agent

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    Not in my opinion, No. You don't get rich selling real estate. Once you sell and pay your transaction costs and taxes they have eaten up a large chunk of your profits.

    Why not hold forever and simply refinance a good part of the created equity out in cash to use for the next purchase?
     
  3. jcwc888

    jcwc888 -

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    Depends what financial position and goals and objectives you have

    Some want to grow their portfolio and may have high income to supplement their loans as well as growing equity.

    Some may want to sell quick just for cashflow or lifestyle purposes.
     
  4. Jamie M

    Jamie M Mortgage Broker - Oz Wide

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    I agree with Prop, I'd have it revalued by the bank, and use the additional equity as a deposit on another property.....renovate again and repeat process :)
     
  5. Andrew L

    Andrew L Chasing Dreams

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    I think the hardest part of answering your question is very personal?

    You must decide if the extra week to week costs of refinancing works for you?

    on figure 750k at 90%lvr = 675k

    675k @ 7.75% = 1006 pw
    your rent 750 pw leaves you with a 300pw hole to fill? Can your finances afford this ? if not take the cash from the sale and do it again then again. Each time getting to a point where you get the cashflow + either by bigger deposits or other investments that can give you the cash to cover the added cost.
     
  6. .toe

    .toe Member

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    If your property is closed to CF neutral then you should have no trouble holding it. If you refinance you'll get a similar amount of equity out as if you sold (given costs & tax). The advantage of holding is that in 7-10 years time you will have 750k extra equity and upto 750/wk extra rent, which you wont have if you sell.
     
  7. cnewport

    cnewport Member

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    Location:
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    Hi Guys.

    after much thought i have decided to hold onto it!

    i feel i would be able to get ahead quicker by re financing and buying another property or 2, ionstead of starting over from scratch.

    i have looked at setting up a company to put all the investments and developments under- now come the question of tust or company. Ive been reading a book on tax and asset protection which i have found useful. so much to learn!
     
  8. Sheryn

    Sheryn Member

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    Unit sight unseen (photos would be good), I would agree hold unit, revalue for a line of credit and use this as deposit for next IP + cash savongs if a short fall in deposit.


    Regards
    Sheryn