wwyd: strategy question

[TMNT]

Apologies for the personal situation question but I'm confused on what I should do

I picked up a property with the intention of a quick Reno and sell

However I'm starting to think the costs and increased expenditure to get a housr ready for sale vs rent is not worth it


Here was my plan

Buy 190
12k Reno
7k stamp duty plus legals
Sell sell 265k minus agents costs
Profit 50k

One of my reasons to sell was once I refinance at 260k
My out of pocket expenses is almost $5k per year
So 100 per week

That to me is a big cashflow shortage

If I sell I can get a quick small profit and be on my way,
The house is in wendouree, in ballarat by the way, another one of the reasons is wendouree is a nice area, it's away from the commission housing but I'm not so sure that the cg will be worth the negative cashflow every year, I feel, if I refinance at 260k it's getting a bit pricey to expect average or above average cg for the area

What does everyone think?

Ps neglect tax as it will be a ppor

 

[D.T.]

Ps neglect tax as it will be a ppor

It all made sense til i got to this bit, now im confused

 

[TMNT]

It all made sense til i got to this bit, now im confused

As in no cgt considerations

 

[Singo]

I have no idea about the CG in that area.

If I can make a quick 30-40k profit, I will just sell and move onto next project.

 

[tobe]

It depends on your circumstances, like you said $100pw is a lot of money, so perhaps its best to sell. I guess you can test the market and see if it will actually sell at that price/profit level.

Where are you planning on putting the $50k profit?

 

[MTR]

Its a no brainer, you sell and you move on and you find another deal where you are not out of pocket $100 pw, as you mentioned you can not depend on further growth.

 

[D.T.]

Its a no brainer, you sell and you move on and you find another deal where you are not out of pocket $100 pw, as you mentioned you can not depend on further growth.

And live where? He said its his ppor

 

[Peter 14.7]

One of my reasons to sell was once I refinance at 260k
My out of pocket expenses is almost $5k per year
So 100 per week

That to me is a big cashflow shortage

r

Have you factored in Deprecation write offs in your holding costs.?

You can claim the reno, and any works from 1985 onwards. even by the previous owners.

I do a lot of Depreciator schedules in Ballarat ( like one a week) for Depreciator. Scott the owner is on the forum.

Many investors moving in due to high tenants demand from uni students.

Have you got agents quotes re rental.? Many are good but I would recommend Megan Bourke , rental manager from Ballarat Prop Group on 0448 007 556. You may be over or under on rental return.

Peter

 

[MTR]

And live where? He said its his ppor

OK, therefore no CGT.
However the issue raised here is $100 pw out of pocket, this was the initial concern/reason for wanting to sell.

So either sell and use the profits for another ppor, assuming one would be reducing debt. Alternatively, just keep repeating the process. Many options, if its purely cash flow issue, holding is not one IMO.

I know a couple in my suburb who renovate period homes and then sell on completion, have been doing this for the last 10 years, continually making gains. Not for me, but they have made some serious $ doing this.

MTR

 

[Asheam]

TMNT

Im confused at why you are using the 260k loan amount in your calculations... with the original loan amount + renovations im assuming the property would be cash flow neutral?

The interest on the 50k that you draw out should really be allocated to whichever property / shares you purchase with the 50k.

 

[Terry_w]

TMNT

Im confused at why you are using the 260k loan amount in your calculations... with the original loan amount + renovations im assuming the property would be cash flow neutral?

The interest on the 50k that you draw out should really be allocated to whichever property / shares you purchase with the 50k.

I agree and have raised this before.

 

[TMNT]

Hey everyone thanks for the responses,

I'm actually agreeing with the comments

Yes a depreciation report would sweeten the deal however I never take into consideration depreciation in my primary calculations as I believe if thendeal doesn't work without depreciation then its not a good deal, plus my income is low and I have so much depreciation from others that my income on paper is basically zero

As for cash flow, with purchase price plus stamp duty plus Reno, the property is neutral or 10pw negative, I was basing my calcs on260k refinanced so that if I use those funds for other purchases yes its interest on the new deal, however the cash flow is severely negative,

Most of my other properties are cash flow neutral after refinance at the higher price which is great for me


And Wendouree being a better suburb of ballarat, I'm a bit sceptical of capital growth,

I ve seen houses in other surrounding areas go form under 200k and I've paid almost 200k for a terribly run down property, which I feel makes my risk profile bigger, especially with the cash flow shortage

I'm definitely leaning towards the sell option

 

[D.T.]

Why is there depreciation if its a ppor?

 

[WattleIdo]

It all made sense til i got to this bit, now im confused

lol. He bought it, lived in it and is now either renting or reno-ing before renting....correct?

I wonder where you will do better at the moment TMNT? Maybe show yourself that there really is something better.
Or you could cut out drinking, coffee and KFC and look ten years younger when you're old and rich?