Sell larger property to gain 2 smaller or not?

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From: Tamara Thorogood


I have an investment property which could sell for $300,000 but only valued by the bank at $230,000(owe$200,000)Currently costs are covered in rent.This is my only property originally my home so not the best investment. Would it be better to sell and start again with $100,000 cash or not?? Tam
 
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Reply: 1.1
From: Manny B


Hi Tamara,

as Rob indicated, your expenses will eat into your profit (ie. selling costs, CGT, etc.) & you will be hit with purchasing costs with that money on the new IPs...

I would hold it if I were you especially as you mentioned that the rent is covering all expenses... I don't have any information on the land size, whether you can subdivide (ie. pluck a unit in the rear) OR whether you can split the home into 2 residences (as you only mentioned that it is large)...

Manny.
 
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Reply: 2
From: Jas


> From: "Tamara Thorogood" <tamara.thorogood@team.telstra.com>

Hey Tamara,

> I have an investment property which could sell for $300,000 but only
> valued by the bank at $230,000(owe$200,000)Currently costs are covered
in
> rent.This is my only property originally my home so not the best
> investment. Would it be better to sell and start again with $100,000
cash
> or not?? Tam

Are you sure that it will sell for $300,000? When was the last
valuation? Maybe the bank would be willing to get closer to the
$300,000 now?

As to whether you should sell it, that depends on what you want to do
investing. If you reckon the place will go up in value in the years to
come, and its covering its own costs, why sell?
On the other hand, if you think the place has done its dash, and you're
willing to accept selling costs taking a chunk out, AND you have a plan
for the money, then go for it.

Why not try talking with (say it with me forumites) AN INDEPEDNENT
MORTGAGE BROKER, and see what they say. They might have options like
taking out a line of credit against it, or other hoopy things.

Jas
 
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