Which investment property to sell and when

I currently own a tenanted investment property in Glenroy which I purchased April 2009. It is a large 2 bedroom, 2 bathroom townhouse (street frontage) on half the block. There are two others on the block. It has quality finishings and an attractive facade. The tenants are great, our rental yield is competitive and their current lease extends until April 2011 (so almost a year).

I also purchased land in Kealba overlooking Brimbank Park in November 2009. Settlement is due in October this year. It has frontage onto Brimbank Park and is one of the last sites that be developed there. The land is quite small - approx 360sqm, but we have a good deal to put a well planned 4 bed, 3 bath double storey house with quality finishings. All up, total costs for land and the building should be $490k.

I'm currently looking to pursue a few business opportunities however and would like to sell one of these properties to ease cashflow as safety net while these business pursuits are in the early stages.

I have been researching, crunching numbers and weighing up whether to:
A) sell Glenroy now as we know we should get a decent price and make a profit; or
B) wait until the land settles and then see whether it is better to sell the land or sell Glenroy and then build on the Kealba land (so we'd have a new, 4 bed, 3 bath property overlooking the park for $490k total cost).

I have been in two minds about this. On the one hand, it seems better to sell Glenroy now, as we know what the market is doing and are pretty confident we will come out with a decent profit after selling costs. However, it rents well and we have quality tenants.

If we wait until November to settle on the land, the market might have levelled off and I am unsure how long it might take to sell the land in Kealba if we chose to (and for what price). There is little data on the suburb and not a lot comes up, so it's hard to gage.

I see pro's and con's for each suburb.

Glenroy has zone 1 station, easy straight trip into the city. Both have decent access to roads. Obviously Kealba has Brimbank park as the front yard and is a stand alone title rather than a townhouse like Glenroy.

I do worry about a few fundamentals of Kealba though - being Power lines and flight paths predominantly. Do you think these will impact on long term growth, or will other positives override these issues (such as the promixity to the park, views, 15kms from city, decent house etc)?

Re Glenroy, my main concern is it becoming a suburb of townhouses. What would differentiate mine from many of the others? Sure, my property does stand out currently from some of the others in regards to the finishings and the facade, but in 10 years time...The suburb has done well recently, but some of that is due to older properties on large land selling well. Do you see decent capital growth long term for a quality townhouse in Glenroy?

I would greatly appreciate all information and opinions as to the above points as well as which area is likely to have better capital growth long term in the context of the type of property we have in Glenroy, and would have in Kealba.

I would like to keep both, but feel a bit property top heavy at the moment in relation to my other assets and see more opportunity pursuing these businesses to then allow myself to get into further property investments.

Many thanks

Jen
 
If it were me (and it isn't), I'd be selling off the land. You have a dead cert in Glenroy and until you get "out of the ground" you do not know your costs of building in Kealba.

For example the costs of building could blow out, the finance deals available at the time may not be the same as now, the builder could go broke halfway through construction, you will have to pay interest on progress payments during the build whilst still receiving no rental income etc. All these things are a risk. The property at Glenroy is a known quantity.

Just my 2c.
 
I'm currently looking to pursue a few business opportunities however and would like to sell one of these properties to ease cashflow as safety net while these business pursuits are in the early stages.

This is the important bit. Doing the build will be generate more risk so I would be selling the land and keeping the Dead Cert as Propertunity calls it.

All the talk about location, services etc is not important to me. It will be reflect in the price either sells for so shouldn't be compared to each other and therefore shouldn't come into the equation.

Gools
 
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