Selling our IP

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From: Paula Dee


Can anyone give us some advice on the sale of our IP? Had 3 IP's. Some major restructuring at my work within the next 3 months may mean that I will be out of work by the end of the year. As a result, hubby and I decided to sell our least performing IP (capital growth wise) to minimise our debt. Have one LOC for all 3 properties and have just been told by someone not to put the proceeds of the sale back into the loan. The reason for this being that if we wish to redraw this money at a future date to topup the purchase a new home for our personal use, this will affect our negative gearing for the remaining IPs. Suggestion was to invest the money until we want to use it. Since our original aim in selling was to minimise our debt, does anyone out there agree with the advice given to us? If so, should we just put it in the bank for easy access if times get tough?

PaulaDee
 
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Reply: 1
From: Rolf Latham


Hi Paula

One immediate option is to dump your LOC and set up an offset structure instead. That way your cash works as hard for you, but your debt level on existing Ips remains the same

ta

Rolf
 
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Reply: 1.1
From: Juzz O'K


Rolf

Why would you advise them to dump their LOC??
Thats probably a great loan structure to have considering the circumstances.
If your unsure of your income in the short
term, its great to have that buffer zone
available.

Paula,

Who told you to sell??
Why would you want to?? What are your
advisors motives??
Maybe try and ride out the storm.
Keeping the extra property may be of
benefit in the long run anyway.
I'm sure you'd ride the storm with the
LOC you already have. It's surprising
how you keep surviving & live to see the next day avoiding all the doom & gloom
peers tell you your in.
Maybe revalue now instead & up the LOC buffer if needed.

Best of luck whichever way you go.

Justin
 
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From: Juzz O'K


Paula,

One thing I forgot to mention,
If you go & revalue, don't tell the
fin institution you think you'll be out
of a job.
Maybe tell them you want the max drawable
equity for the perceived Christmas slowdown
that happens every year, for the purchase of another property.

You never know??

Justin
 
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Reply: 2
From: Paula Dee


Thanks for your responses. Revaluing is not an option though, as property is already sold. Sold in 1 week to our own tenant! Feel good about that as they will not lose their home and money for us won't be tight at Christmas. Wish I approached them first though, would not have needed an agent! Anyway, still stuck as to what to do with the proceeds as I agree that the LOC is a great loan structure for purchasing property and keeping track of all your income and expenses.

PaulaDee
 
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