What to do in Sydney

[WASP]

We purchased a property in Blacktown Council 6 years ago and it's value would have gone up around $100,000.00 to $150,000.00 with the recent hype.

Last CMA valuation was in May 2013 and it showed an increase of around $60,000.00. In January this year we accessed some equity at $35,000.00 as a safety buffer or for renovation money

The property is an older 3x1 stand alone house in need of renovation and was purchased with this in mind, however we didn't have the money at that point. Rents have been good, tenants mixed but reasonable and the agents good at dealing with them.

Now we are considering what our options are

The property would be dual occupancy and looks like all of its neighbours in the street, but would be a bit tired and in need of some tender loving care

Renovate
Revalue
Purchase somewhere else with equity
Rebuild
Sell
Other?

 

[Gockie]

Revalue and pull out equity. I think prices will still be strong for another 12 months at least, I wouldn't sell just yet.

 

[WASP]

Thanks

We are with RAMS and the last equity extraction was a bit of a convulated pain

 

[Shahin_Afarin]

Thanks

We are with RAMS and the last equity extraction was a bit of a convulated pain

I seriously scratch my head at lenders - they are a pain when it comes to "simple" equity releases" but do 80% no LMI for lo doc with a simple accountant's letter.

 

[redwing]

I dropped into St George today and had "issues" just setting up a direct debit from a WBC LOC

All sorted, eventually

 

[travelbug]

What do you mean by-
The property would be dual occupancy.

Would a reno at this stage increase the rent? Would you need to kick the tenants out?
If rent increase was minimal and you'd have to get new tenants I would not renovate until I was going to sell.

Rebuild? as in rip it down and build a dual occ?

You could refinance with another lender for the higher value if topping up is a pain.

Sell-Would there be an upside? Is there somewhere else you'd do better with the money (given the CGT, in/out costs etc)?

Number crunching time!

 

[knightm]

I dropped into St George today and had "issues" just setting up a direct debit from a WBC LOC

All sorted, eventually

we all have "issues" at banks. I have had several with St George. The thing is they pay their low level clerks peanuts. Result? Monkeys.

 

[redwing]

You could refinance with another lender for the higher value if topping up is a pain.

Number crunching time!

Maybe additional costs if a fixed interest interest only loan, with the drop in rates

 

[RetireRich101]

A work colleague showed me a property he purchased in South Blacktown on the weekend.. a 1970 brick veneer house, in good condition, in a corner 550m2.

He paid 575k for it unconditional. The previous owner purchased 485k in Jan 2014 and no work was done on it. a 90k or 18% increase in 8 months!!!

My backyard is really brewing at the moment.

 

[IFBF]

Strategic Solution

Thanks WASP for your question.... I think it is a good one... as it highlights a problem I find with most investors.

Lending (Leverage) is based on Security (your property) and Servicability (that we have little information about).

As your Financial Strategist (Licensed Credit Adviser, Financial Adviser & Investment Property Coach) in South Blacktown, I would recommend a different approach. Your property is investment vehicle. You really need to contemplate the destination before determining the need for an upgrade (reno / rebuild) and your resources (income, savings, insurance, time) & capability (knowledge, skill set).

We have been advising clients in this market to restructure and make the most of the low fixed rates. Cash in on equity with a Fixed with 100% offset & set up an investment pool / buffer. This will help move quickly on a good investment elsewhere, while mitigating any issues you may have with tenants or value fluctuations in the future.

Remember, you only lose money on property "When you Sell". So don't rush.. God bless ...

1) Servicability - based on your income - PayG, S/E
2) Why have you gone with RAMS, do you need a low doc?
3) Do you know your numbers and have you got a strategy?

 

[WASP]

Our overall property portfolio lvr is 77%, with this property and the recent capital growth in Sydney the equity growth has been exceptional as indicated in many posts here. The values will surely retract slightly after the peak (whenever that is).

We purchased it to get our foot in the door of a subdued market with reasonable yield at the tail end of the GFC. The strategy was to renovate and revalue but we couldn't afford the renovation at the time. It is large enough for a dual occupancy according to the council, though the area would need some re gentrification before that happens or we may just overcapit

The property is an older (42 years) free standing fibro/brick veneer property surrounded by similar homes. They would be similar to many of Nathan and Skaters properties in the area I think

Gross Rental yield is 7.73% on purchase price but now more like 5.03% on current value

We extracted some equity in January of approximately $35,000 and placed this into a line of credit. There would be anywhere from $100,000 to $150,000 equity there on an exceptional day.