My investing philosophies are very much influenced by the old Italian relatives I have who have made a boat lad of money in property. That's relatives by marriage btw.
They have always sat around,drank wine, smoke and talk about business, family, property etc.....they dont know what a spreadsheet is, what negative cash flow means (but they knw the concept), and all the oter fancy and in depth terms and strategies and formulas that modern property investing has become.
They look at property investing in simple terms, like "interest rates up, property prices down, interest rates down, property prices up" etc
Most of them have had little formal education but what they do know intuitively and discuss is what makes a good investment and what makes a bad one. They will not hold on to or even buy a bad one. They will not buy at the wrong time of the cycle or they will not buy with low yield. (but not in those terms).
They have become wealthy with property and they generally pass their properties to their kids when they retire so they can gt a pension or whatever. They also do this to give the grown kids a head start in life.
What I'm getting at here, is if your property is instinctively and dollar wise a bad buy (regardless of hoping for future cap gains), as it is now. Get rid of it and move on. Come back into the market when times are better and benefit then. I think you know you should sell it, the problem is tho you will most get less for it than what you think. That's a problem in itself. But I wouldn't be copping a $34k hair cut per year. that doesn't make financial and investing sense.
I wouldn't be copping that even if the market was moving up. I just don't think it makes investing sense regardless of property price direction. Can I ask why you bought it?
When i look at investments, i think If it wouldn't make sense to my old uneducated Italian paesani, then it doesn't make sense to me. It's all pretty simple. People run into trouble when they don't follow simple.
I updated the spreadsheet attached to the earlier post to add a row for inflation nd made the cash-flow match the OP's figures.
The first column is Year 0 -- the starting point. There is no capital growth because you have just bought it. The rest of the columns (Year 1 etc) are the position after a year of capital growth, inflation and cash-flow.
The cash-flow should be whatever the property costs to hold. If you negative gear then put the amount that's come out of your pocket after negative gearing has worked its magic.
My aim is to illustrate that if the cash-flow is significantly negative then holding onto the property during periods where capital growth is negative or low (below inflation) results in a position that will require obscene and unrealistic amounts of rapid capital growth to recover from, or a significant amount of time with smaller growth above inflation.
