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hello, my wife and I are trying decide wether to sell investment property to pay off our mortgage quicker, we estimate that we can then pay our property off in 2 years rather than 10 years. Thank you for your knowledge, could I please have a copy of your spread sheet that you used for your calculations.???? thank you once again
Hi John, just following up on the comments on this blog – could you please let me know if you received a copy of the spreadsheet? If so, I’d love to hear what you thought of it. If not, I can send through a copy tomorrow if you’d still like one. Kind Regards, Lacey
I would like to know or get some contacts to call so we can chat to someone who can advise us about our investment property. We don’t reside in it and rent a property elsewhere paying an amount we could pay weekly for our own home if we sell the investment?!
Very interesting article. Makes a lot of sense. Thank you. Please may I have a copy of your spreadsheet?
Hi Sally, thanks for your comment. I’ve just been refreshing this article and noticed it, but I don’t think I got an email through our contact form so you may not have received the spreadsheet. Apologies if that’s the case – just let me know if you’d still like a copy 🙂 Kind Regards, Lacey
Great article. Very informational. Thank you
Thanks Nathalie, much appreciated 🙂
Hi Lacey, Thank you for your blog, was googling for advice in trying to decide whether to refinance our previous PPOR property (1hr away from Sydney) or purchase a place for my family and i to live in (closer to work, but houses are $1.2m) We don’t have any debt (apart from mortage), we have 3 kids or should we just purchase a couple of properties in Goldcoast or rural area? I’m over property inspections & kids would like to have their own space. Anyways that is how I came upon your website. Thank you again. Also, would love to look at your spreadsheet too, maybe that will help me make a decision.
Hi Mel, thanks for your comment and for subscribing 🙂 Sounds like you’ve got some decisions to make. I’ve emailed you separately with the spreadsheet and some instructions. I look forward to hearing how you go with it. Cheers, Lacey
I would love a copy of your spreadsheet too please!
Just emailed it through Sharon, hope you find it useful 🙂
Hi,
Thank you I found the whole article easy to read and very helpful
Can I please have a copy of your spreadsheet.
Many thanks.
Thanks Jo, glad you liked it 🙂 Email is on its way.
Hi Lacey, i have an investment property in Canberra that i been holding for 4 yrs now. The price did not go up since i bought it due to influx of units. I’am currently neutrally geared. But i’m thinking to sell the property now as there are more units coming up in the next few years so i think there will be no capital growth for the next 5 to 10 yrs as predicted by agents. My property is close to the proposed light rail. Should i sell it considering that construction of light rail started already.
Hi Geraldine, the spreadsheet is on its way to your email now. I’ve included some detail about your question in the email, but for the benefit of other readers here are some points to consider:
1. Is the purpose of the property to provide passive income, or capital growth?
2. If it’s passive income, how long till it will be positively geared? Will the rental return meet your goals?
3. If it’s capital, 4yrs is not long to hold a property. Do you have equity, counting cost of sale? Or will you walk away with debt?
Hope these points are helpful and that the spreadsheet is useful. Best of luck with your decision making.
By the way can i also get the spreadsheet.
I stumbled upon this article whilst searching for information on selling vs holding PPOR after purchasing new property.
Lacey, I will really appreciate if you can send me a copy of the spread sheet please.
Hi Om, it’s on its way to you now. Enjoy 🙂
Thanks. Received the spreadsheet.
We have a PPOR that we have been living in for the last 8 years. Capital growth has been @ 7% per annum. We are building a house which will be our new PPOR. The construction loan is secured against our existing PPOR.
If we convert PPOR to investment, the property will be neutrally geared. If we sell it the bank may force us to reduce the balance of new PPOR.
I am in late 30s and my intention is to reduce my tax liability.
Any suggestions?
Hi Om,
A couple of things for you to consider (you may already be aware of these):
1. If you’re neutrally geared, you won’t get much – if anything – in the way of tax minimisation regarding your annual income tax. I personally think that’s a good thing – neutral or positively geared properties are what property investing is all about, because the income from them can supplement your wages when you’re ready to work less/retire.
2. As the to-be-investment property was your PPOR, you’ve got six years to sell it without needing to pay capital gains tax provided you don’t sell any other PPORs in that period (though keep an eye out for any changes in this policy – politicians regularly threaten to get rid of it).
I’d be thinking about how the investment property would fit in with your strategy. Do you want property? If so, keeping a previous PPOR can be good – even if you go past 6 years, you can pro-rata the time spent as a PPOR, so make sure you get a valuation when you move into the new house so you can use that for any future tax calcs.
That said, I personally prefer to pay down as much debt as I can on my home. There’s no tax benefit to that debt. I guess it’s about your personal preference and how much debt you think you can sustain.
Hope that helps 🙂
Hi Lacey,
Would you please email me your spreadsheet would be much appreciated.
Warm regards
Alastair
Great article and informative especially for me a ‘mum & dad’ investor. Thank you.
Can you please send me a copy of the spreadsheet.
Thanks Bruce 🙂 It’s on its way to you now.
Hi Lacey,
Contacting you from the other side of the world.
Very informative and easy to read your article and with lots of helping calculations to work with.
I want to enter the investing on real estate world so having your spreadsheet would help me to better understand it and help to diversify from financial assets.
Would you please email me the spreadsheet
Thanks
Thanks Alfredo! The spreadsheet is on its way to you now. Best of luck with your decision making 🙂
Hi there I have left a couple of requests for he excel spreadsheet from the article. Would it be possible to please have the spreadsheet emailed as I am currently weighing up our options of selling out investment property? Many thanks Sue
Hi Sue, sorry for the delay. I replied to your original request the day before your comment, so perhaps my emails aren’t getting through to you. I’ve replied again today without an attachment to see if that makes a difference. Please check your Junk folder, and anywhere else Gmail likes to hide emails. If you’ve got the emails, please reply to let me know. If they haven’t come through, perhaps you can comment to suggest another email address I might try? Or add my email (lacey at moneyschool dot org dot au) to your contacts list and I’ll try again?
Hi ,
Can I get a copy of the spreadsheet please.
Hi Rod, you should have the spreadsheet in your email by now. Let me know if you haven’t 🙂
Hi Lacey,
Great article. I’ve had an apartment in West Perth for 6yrs now that has been ‘almost’ neutral, but Im considering selling it (for a loss) as I just cant see any capital growth occurring over the next 5+ yrs, and cant see the point of just sitting ‘neutral’. Id live a copy of your spreadsheet so I can run a couple possible scenarios.
Thanks
Rob
Thanks Rob! Glad you liked it 🙂 Spreadsheet is on its way to you now, hope it helps.
Great article, thank you. We have an investment unit in Perth. It has dropped in value a lot and so has the rent. We have a $410k mortgage on it and we would be lucky to get $330k if we sell. The rent has dropped from $430 per week to $290 per week and it was empty for 5 months. The strata is nearly $700 a quarter. It cost us $17000 while empty. I want to sell and add the loss to our home mortgage. This place causes me so much stress. We could pay our own home off in 8years if the unit was gone. It is a constant problem. My husband thinks we should keep it for another year to see if values go up. After reading your article I want to sell. What would you do? Thanks so much for the advice.
Hi Natalie, the spreadsheet it on its way to you now. I hope the spreadsheet helps you have a conversation with your husband looking at the numbers as well as thinking about the stress – losing sleep is costly! Your story is a common one in Perth at the moment. It’s a really hard decision to make when you know selling will still leave you with debt to pay off. I’d be looking at the numbers in the context of your full financial position and deciding if you think it’s worth the stress to hang on. Best of luck with the decision – hope the article and spreadsheet help 🙂
Hi Lacey,
Thanks for the spreadsheet and the good advice. I’m glad that I stumbled across your blog.
Thanks again,
Nat
Hi – I would love a copy of you spreadsheet – thanks Sue
It’s on its way to you now 🙂
Hi Lacey,
Good to read some local advice for once, instead of hearing all the east property boom news.
Have a Perth rental since 2006 and made a bit of profit initially, but not much since. Cant really see much happening with growth in next few years and rents are dropping, so thinking to get out, but want to make the most of the small gain.
Would like the spreadsheet to look at some numbers please.
Cheers
Adam
Thanks Adam, glad you liked the article. The spreadsheet is on its way to you 🙂
Good morning
Thanks for the information on your web page as my wife has just lost her job and we are considering selling a rental property to reduce debt.
Can I have a copy of the spreadsheet as well please.
Many thanks
Garry
Hi Garry, thanks for your comment. Sounds like a good time to look at the numbers! The spreadsheet is on its way to you now 🙂
Hi, so i have an investment 1bedroom unit bought 7 years ago close to amenities in wealthy suburb for 312k and is now worth 290k we owe 295k mortgage. We get rent of $245 weekly and outlay 5k yearly on running costs. There are a lot of units going up and im afraid we wont see any more capital growth. The unit will need around 4k to bring up to scratch in order to sell. Should we cut our losses and end up with a debt after selling fees and concentrate on paying off own home plus debt. Im struggling with making no profit and the reality of forking out more money to pay the difference. Whats your advice?
Hi Christina, thanks for your comment. It’s hard to give you advice without knowing your full situation, so probably best to see a financial advisor for a chat (do a free ‘discovery session’ – maybe even with several potential advisors!) Problem is, if you sell, you’ll be left with a debt (at least $5k + costs of sale, such as commission to the agent). It’s a hard decision to make. I’d be weighing up whether you’re better off to get rid of it from the perspective of stress – sounds like it might be costing you sleep.
Hi Lacey,
Excellent and very relevant blog. I’m from Brissy and we bought a townhouse in Perth in 2009, got good equity that allowed us to move back to QLD and buy on the Gold Coast. We have seen a financial advisor and surprise surprise they agree with what we suspected about flicking the Perth property. I think it’s a good idea but I’d love to crunch the number myself if you don’t minding emailing me your spreadsheet. Thank you so much for your sensible blog and generous spreadsheet. I’m going to talk to my wife about your moneyschool program. It looks great. You rock! Cheers, Keith
Thanks Keith, glad you liked it 🙂 The spreadsheet is on its way through the ether to you now. Hope it helps you with your decision.
Hi Lacey,
Your article lays out all the options perfectly. I would love the spreadsheet if possible please.
I have written the below more for my own crack at it but in case you have time to respond here is our situation My calculations could be wildly out and please excuse my workings too!!
Myself and my wife have been grappling with selling our investment property which is our former PPoR in Sydney’s inner west to help pay down or hefty mortgage on our recently purchased 3rd PPoR. We now have the 2 properties:
Current PPoR – Value – Approx $1,500,000. Debt – $1,210,000 (80.6% D/E)
Investment – Value – Approx $1,100,000. Debt – $500,000. Purchase costs approx $530,000 . This was bought in Dec 2007 and has been rented since May 2010. Currently at $710 a week.
As I am going through a career change my income is reduced and my wife is the main earner at present. I feel we would be better paying down a large chunk on our PPoR as a safety move and look at investing in property in other areas.
In CGT terms, the unfortunate thing is we are now outside the 6 yr rule. Is there a way that the 6 yrs can be taken into account rather than using the ratio of time as PPoR vs Investment?
With the this rule I estimate the following – Time rented = 85 months out of 114 – if we were to sell in a few months) = 75% of the capital gain
.745 * $550k ($570k – $20k selling costs) = $412.5k
Minus the 50% CGT discount = $206.25k
CGT payable on $206.25k 50/50 for my wife. Allowing for our individual tax rates = approx $76k
$600k profit – $20k costs – $76k = $504k to either pay off the mortgage, put into offset or a mixture of both (with a view to building a property portfolio).
Phew, that was fun!
Either way thanks so much for your article.
Regards,
Mark – Northmead
Wow, thanks Mark – great to see your worked example! Very similar to the spreadsheet, which is winging its way through the electronic cloud to you now. Hope you find it helpful 🙂 If you get away with $20k selling costs you’ll be doing well – I’ve typically seen 2.5 – 3% of the sale price for agents commissions, then add conveyancing to that. Apart from that, your calcs look good to me, and I’m sure it will feel great to knock $500k off that PPoR mortgage (or at least put it in an offset so you reduce your interest bill). Best of luck with it 🙂
Hi Lacey,
Great informative article!!!I have a question in relation to PPOR.
I own a property thats solely in my name where myself ,Husband and 2 Children live.
We have purchased a house and land that we are going to use as an investment property and will be owned solely by my husband .
TO avoid capital gains in the future could our family move into the property for say 3-6 months initially then use it as an investment property.
If the property was sold in say 3 years time what would be the tax implications??
Thanks
Hi Lacey~ Would you please send me your Excel spreadsheets? I am in the middle of a very hard decision re: selling or moving back into my rental. It is my first and only ever owned home. I bought it new at the height of the bubble in 2007. It has gained less than $100K in value over the last ten years and moreover, the neighborhood is not highly sought after (though it is in Seattle…) I currently rent but I LOVE my neighborhood. I don’t really want to move back into the rental. However, I don’t have much liquid cash so I don’t like the thought of gambling on damage that the next tenants may cause. I also haven’t been able to find new tenants to replace my current tenants who are moving out this month. I must make this decision ASAP…please help!!! Thank you~
Hi Amber, the spreadsheets are winging their way through the electronic ether to you now. I can imagine how tough this decision must be for you, and I can’t see an easy answer. I am not familiar with the US market (I’m in Australia) so I’ve got no insights for you there. I’m wondering what Seattle’s property market is doing – are prices staying stagnant? Are they likely to stay that way? And if you sell, will you kick yourself if the prices do go up? Sometimes the stress factor is a big one – will you sleep better not having to worry about that property if you sell it? I’d definitely recommend investigating Landlords insurance if you decide to keep it and rent it out – not sure if that’s in the States too? We have it in Australia, and it’s to protect landlords against malicious damage or tenants who skip out without paying their rent.
Interesting read – thanks Lacey.
Would appreciate the excel to have a look, help me make an informed decision
D
Hi D, You’re welcome. It’s on its way to you now 🙂 Best of luck with the decision making!
HI Lacey,
Interesting what happened in Perth. Toronto is at its highest ever annual increase. My neighborhood is up 43% from last year? Time to sell?
Can you please send me excel sheet? Thank you!!!
Hi Matt, wow that sounds like a big temptation. The spreadsheet is on its way to you know. Hope you find it helpful 🙂
Hi there, good info. thank you. Can you please send me a copy of the spreadsheet, thanks.
Hi Lacey, can I please have a copy of the spreadsheet? Thank you kindly.
Hi John, the spreadsheet is winging its way to you now 🙂
Hi Lacey
Can you please send me copy of the spreadsheet? Thank you kindly
I am on the progress to sell my 2 investment properties to pay my new land purchase
You have done what I am thinking and possible scenario
Best regards
Angus
Hi Angus, the spreadsheet it on its way to you now. Hope you find it helpful 🙂
Fantastic article Lacey and a real help for my current decision making. Would you mind sending me a copy of the spreadsheet as well?
Kind Regards,
Shane
Hi Shane, the spreadsheet’s heading your way now 🙂
Useful article, thanks!
Trying to decide whether to hold or sell our investment property when moving back to Australia soon after a few years abroad. Will be purchasing a new PPOR so reason #1 looms large, but have only held it for a few years and capital growth (in Canberra) not as impressive as some other cities..
I would appreciate if you could send a copy of the spreadsheet.
Thanks again.
Hi Lacy,
Very interesting and informative article.
Can you please send me a copy of the spreadsheet.
Thank you so much.
Josh
Thanks Josh! It’s on its way to you now.
Hi Lacey,
I just sat down tonight to work on this very question and a quick search on the net for some guidance lead me to your site which has been so informative. Could you send me the spreadsheet? Math is not my strength but your blog seems easy to follow and has been a big help so far, just prompting some questions to consider which i hadnt thought about.
Thanks so much!
Adrian
Thanks Adrian, I’m thrilled you found it so useful 🙂 I’ve emailed you the spreadsheet, let me know if it doesn’t arrive. Best of luck with your decision making 🙂
Hi Lacey,
Could you please send me a copy of your spreadsheet.
Thanks heaps,
Lyall
Hi Lacey,
Thank you for freely sharing this article you spent a fair amount of time writing. I really enjoyed it and would like to ask for a copy of your spreadsheet, please.
I have several units on the Gold Coast that I bought during the GFC for a discounted price. They have been successfully tenanted during this time, but the cash flow is becoming a problem with a growing family and I need to work out how much my cashflow will improve if I get rid of them both after all the costs are weighed up.
Cheers,
Chris
Hi Chris, thanks! It’s on its way to you now 🙂
Great article, could i please have a copy of the spreadsheet.
Thanks Hanan, on its way to you now 🙂
Hi, thanks for your interesting blog. In my situation, my current home is mortgaged against 2 investment property’s that have both declined in value.
Property 1 purchased for $330,000 has been recently valued at $210,000 but I still owe $270,000. I get rent of $300 per week. The thought of losing $100,000 makes me sick to the core. This house is in the country so will take time 5-7 years minimum to go up in value, but we have good tenants & can afford $100 week to keep this going if it is worth it or do I just cut my losses?
Property 2 cost $150,000, owe $149,000, valued at $110,000, good tenants paying $200 week rent, also in the country. This property is in need of ongoing repairs also as it is very old.
I would ideally like to keep both- is it worth holding onto for another 5 years to see if market recovers & while I can afford?
The bad thing is I don’t own my own home on paper as mortgaged to the bank as security over these loans above but I don’t owe any money on my home which is valued at approx $550,000.
I would love your advise & spreadsheet please. Kind regards- Jenny
Hi Jenny, that’s a tough situation. I can’t give you specific advice, but I can certainly relate to how you feel – I sold a property at a loss a few years ago, and it sucked at the time, but now that I’ve seen the Perth market go backwards I have been thanking my lucky stars that I sold when I did. That said, I walked away with cash – I think perhaps I would have tried to hold on if I’d been left with debt. I’d be thinking about two things: 1. Do you think the 5-7yr growth cycle will apply for these properties? 2. Can you sleep well at night if you keep them?
Thanks for this article. Some really useful points here.
We’d appreciate a copy of your spreadsheet please to help with our decision-making…
Glad you liked it Claire 🙂 Spreadsheet is heading your way now 🙂
We are wondering about the pros and cons of selling our investment property in Sydney… Your article asks the questions that we’re asking ourselves. Can I get a copy of the spreadsheet please?
Thanks Ben 🙂 It’s on its way to you now 🙂
Spreadsheet please!
Trying to work out whether seelingbour primary residence or investment is a good idea to buy a bigger primary residence.
Investment =$310,000 owe $280,000.
Primary =$420,000, owe $80,000.
Both exceed $100 for every $100,000 when rented but low overall growth for both. New primary residence would be approx $500,000.
Very informative article. Could you please email me the excel spreadsheet?
Many Thanks for the article and very useful for understanding the insights of property selling.I am also considering selling my investment property in Melbourne and thinking to buy for living in expensive Sydney down the track.
Please send the spread sheet.
Thank you for the very informative document, understanding how to deal with the financial aspect of property investment is certainly very helpful for me.
Please send me the spreadsheet.
Like the article may have to sell investment property at a loss tho.
Please send the spread sheet.
Thanks Rob. Bummer about needing to take a loss. Hope the spreadsheet helps (it’s on its way to you now).
Very informative article. Would appreciate a copy of the excel spreadsheet.
Thank you.
Thanks Jay! On its way 🙂
Hi! Great article! Can I please receive the spreadsheet? I’d like to run some calculations here :). Thanks for sharing your knowledge 🙂
Thanks Rafael 🙂 It’s on its way to you now.
Hello, may I please have a copy of the spreadsheet?
Thanks,
Mel.
Absolutely, it’s on its way to you now 🙂
Thank you for explaining the different scenarios in such a details. Very informative.
Can I please get the spreadsheet?
You’re welcome, glad you liked it 🙂 Spreadsheet is on its way to you now!
Thank you for the very informative document, understanding how to deal with the financial aspect of property investment is certainly very helpful for us. We are in this cross road and stuck for more then three weeks, article helps to make decision with confidence.
Please send me the spreadsheet
You’re welcome Sateesh 🙂 It’s on its way to you now 🙂 Good luck with your decision making!
I don’t want to work this out myself! Do I go to an accountant or a financial advisor???
An advisor or planner. But please – read this first! http://www.moneyschool.org.au/planning/the-potential-perils-of-paid-financial-advice/
Hi Lacey,
I would love a copy of your spreadsheet please as we are trying to decide whether or not to sell our investment property in Melbourne at a loss or keep holding on. We have had it for 7 years and it is currently valued at $50,000 under our purchase price. Will be seeking independent financial advice but the spreadsheet will assist us prior to meeting with advisor. Thanks in advance.
It’s on its way to you now – best of luck with the decision making 🙂
Hi Lacey
I purchased an investment property in Brisbane last year which, based on recently looking at sale prices of properties in the area, I would say I paid too much for and is possibly in negative equity. I’m currently paying interest-only on the loan, as recommended by my accountant – am I better off starting to pay off some of the principal now in order to reduce my future exposure to debt on the property? Or continue saving that money for a deposit on a better (smarter) purchase in a different area next year, to diversify and balance my portfolio out?
Thanks,
Anna
Hi Anna, I can’t give you specific advice without knowing your full situation, but here’s a few things to think about:
You’ve got two choices: ride it out and hope that prices go up, or sell and take the loss. Can you afford to wait? How confident are you that prices will eventually go up for that property? Did you buy for capital growth, or are you more interested in the yield?
Transaction costs on property being what they are (stamp duty, agent commissions etc) it’s always a big call to sell quickly.
Regarding debt: anything you can do to reduce the loan principal increases your equity and decreases how much interest you are charged on the mortgage. If you’ve got the spare cash, decreasing debt is worth considering.
Hi, we are a mature age couple- age 53. We have an investment property in Gold Coast ( an apartment in Broadbeach) that was bought two years ago for $410000. I want to now buy a home in Brisbane costing $55000 ( another inner city apartment). My investment property is positively geared. Should I sell it to buy my home in Brisbane? My estate agent advices that I could get $465000 from the sale of my investment property. Please advice. Also, could I please have your spreadsheet?
Hi Vrinda, thanks for your comment. The spreadsheet it on its way to you now. I can’t give you specific advice on this, but here’s a few things to consider:
1. Owning your own home without a mortgage before you retire is an excellent aim to have. Do you have enough capital and cash flow to make that happen if you buy the Brisbane property without the equity from the investment property?
2. Did you buy the Broadbeach property with the aim of having that as a cash flow source in retirement? Or did you intend to use any capital growth to help you secure a home?
3. Two years is a very short turnaround for property, considering the stamp duty you paid for Broadbeach and would have to pay for Brisbane, and the agent’s fee on a Broadbeach sale. Make sure your projections and calculations account for that.
Best of luck!
HI Lacey
thanks for the great article. I am feeling the stress of having an investment property that it seems as soon as we acquired it it dropped in value. we have had it for 10 years and stand to lose about $100k if we sell it. It has been a good tax break for my husband, but he is now not on the money he used to be on.
Could you please also send me a copy of the spread sheet
You’re welcome, Suzanne. Spreadsheet on its way to you now. Hope you find it helpful 🙂
Hello Lacey
Great article, I am also having a hard decision about if I should sell my investment property to buy a family home. I sold my family home back in 2013 as the capital growth was very slow. we then purchased an investment property in Melbourne while we were renting elsewhere. The property has now been valued more than double, original purchase price 430k and current valuation at 960k. its negatively geared so costing a bit of money. Townhouses are costing around 860k, I am not sure which direction to take so could you please advise
Hi Wal, that is a tough choice, complicated by the unavoidable emotions that come into play when you think of buying a home. In your shoes, I’d be considering:
– the long term plan: are you happy to keep renting forever? Or is owning your own home important to you?
– why you bought the investment property: was it to keep yourselves in the market so you could buy again later, or did you buy it to earn a passive income from through rent once it becomes positively geared?
– cost of sale: you’ll be up for agent’s fees on the sale, and stamp duty on the new home, and capital gains tax on the profits (50% of $960k-$430k-cost of sale and any outstanding depreciating items etc, taxed at your prevailing marginal rate)*. It’s a big whack of change. What does that leave you in terms of cash to deposit on the $860k townhouse, and how big will the mortgage need to be? Can you afford that? This will be heavily dependent on your stage of life, complete financial situation etc. so it’s a big one.
Lots to think about! Let me know if you want a copy of the spreadsheet so you can play with some numbers 🙂
* Definitely talk to a property tax person about whether there’s any advantage to moving into the home for a few months before sale. I *think* coz it was a rental to begin with, you can’t get the primary place of residence capital gains tax exemption, but I may be wrong so please see an expert.
Hi Lacey,
Great article and can I please have a copy of your spreadsheet?
I”ve got an investment property that I’d like to do the numbers on selling or holding on to.
Thanks, Michael.
Hi
What do you advise investors who lost a fortune in the Pilbara but who are still holding on unlike many others who have declared bankruptcy?
Hi Gwen, great question, and a timely one. I was chatting to someone just last week who had nine Pilbara properties. They’ve sold five, but four remain.
My questions to anyone in this situation are:
1. Why are you holding on? Are you hoping the prices will go back up and you’ll be able to either keep them as cash-producing assets, or sell them when they reach a position of positive equity? Or are you trying to avoid bankruptcy/loss of your home/something similar? If it’s the former – how long can you afford to pay that debt for before you’d be forced into bankruptcy? And do you think prices will actually reach that point again (really)? If it’s the latter – read on.
2. What is the current equity position on the property/ies? If there is positive equity (i.e. likely sale value is higher than the mortgage), the bank will have a preference to foreclose and sell, redeeming their losses. If you’re in a negative equity position (i.e. the mortgage is higher than the likely sale value), you’re a liability to the bank. If they foreclose, that loss will hit their books. If you hang on, you’re tying up their lending capacity. Both are bad news for the bank. Believe it or not, the latter (negative equity) is a stronger negotiating position because the bank wants you off their books. The complicating factor is how your finance was arranged – is your home, or other assets, tied up in the guarantee of the loan – and what other assets you own.
I’ve heard second- and third-hand stories of people negotiating to walk away from their Pilbara properties for a settlement of under 1% of the negative equity value, and the bank is happy to do this because they can get the loan off their books. I haven’t spoken to these people so I don’t know their overall position or the details of the negotiation, but this is different to declaring bankruptcy.
I’d recommend Consumer Credit Legal Service WA (http://cclswa.org.au/) as a first stop for free advice on these options, specific to your personal situation.
I hope that helps.
Could I get a copy of this spreadsheet please, thanks
It’s on its way to you now 🙂
Hi Lacey
Great read! In 2011 a purchased my first home which I lived in for just over a year. I started renting out the property at the end of 2012 and find myself with a decision to make whether I sell to avoid capital gains tax (would have been rented for 6 years late 2018) or hold onto it long term.
The house was purchased for 240k and was recently appraised for 310k. It’s rented for $290 a week and it has always had a steady rental income. It is pretty much neutrally geared.
Do you think I Am I best to sell in next 12 months or hold onto it long term?
Could I please also have copy of spreadsheet.
Good question Josh, and there’s no right or wrong answer here. I’d be thinking about:
– why you bought. Capital growth? Or yield? Or both?
– do you want to own rental property as part of an income replacement strategy?
Having the valuation is awesome. if you decide to hold, get another when the 6yrs is about to expire, then your CGT calcs are only on the prince increase from then, and remember you could move back in to reset your 6yr CGT exemption provided you don’t sell another principal place of residence in that time. Good luck 🙂
great info and glad I stumbled on your blog. like many others I came here looking to make my mind up whether to sell the IP.
bought 4ish years ago for 365,00 in regional NSW that boomed with the mines but is now valued at 45000 less than PP.
Have just recently changed the loan to P&I to start paying something down on it.
Currently rented at 320pw (went up from 300pw this month after real estates recommendation) signs of improvement in the area maybe?
Still more or less owe the full 365k on the IP mortgage and having to find a substantial amount of extra cash each month to pay the loan
Owe 460k on PPoR
I would like to divert the extra cash I pay on this IP to my PPoR and after reading to informative blog I am still no clearer.
your spreadsheet would surely help.
I don’t not expect free financial advice but any hints on what you would do would be welcomed. 🙂
many thanks and keep up the good work.
Hi Dave, great that you’re thinking this through. Spreadsheet is on its way, hope that helps.
Given the location, I’d be thinking about whether an increase in price is likely in the next 3-5yrs and therefore whether to hang on. Since you’re having to pay extra above the rent, it’s not ideal to hang on unless a decent price rise is likely, and who knows if that’s the case (where’s that crystal ball when you need it?)
With a mortgage on your PPoR, diverting extra cash to the home repayments is a great idea.
I guess the gut feel test might be a good one here – if you sell, will you sleep better at night?
Best of luck with the decision making 🙂
Hi Lacey
can I please get a copy of the spreadsheet
Also I have a negatively geared property in Perth I can keep up with costs to run it but I would at a Loss when I sell and would still have a mortgage on it any suggestions
Greatly appreciated
Hi Lacey,
Thanks for a very thoughtful and objectively written article! In view of retirement, we are going through similar decision-making times concerning our investment property. May I request a copy of the said Spreadsheet?
Regards, Simon
Glad you liked it Simon 🙂 Spreadsheet is on its way now.
Hi – I would love a copy of your spreadsheet please.
On its way to you now Ebbony 🙂
Hi,
Thank you for an excellent article!.. I’m trying to work out if I should sell my investment property that used to be my ppor 4 years ago, please send me the spreadsheet thanks
Cheers chitrali
Thanks Chitrali! I think by now you’ve got the spreadsheet, but if it hasn’t made it past your SPAM/junk filter you can get it via this form: http://app.convertfox.com/forms/29883883 Enjoy!
Hi, I wish I have read your article a bit earlier before I made the decision to sale one of our investment properties.
It is very wise way to make decision base on the numbers. Great article and I think I have made right decision as I have met a couple of the reasons that you mentioned in your article why to sale.
In order to prove that may I please the spreadsheet to show on the numbers.
I enjoying read your blog. Well done.
Warm regards
Min
Just fill out this form: http://app.convertfox.com/forms/29883883, then you’ll get the spreadsheet automatically. Hope it helps confirm what you were thinking re: your sale 🙂
Thanks for that, great article.
Can i please get a copy of the spreadsheet?
Hi Peter, head to this link: http://app.convertfox.com/forms/29883883 and enter your details, once you confirm you’ll get a link to download. Hope you find it helpful 🙂
Could I get a copy of the spreadsheet please
Hi Tracy, if you enter your details here http://app.convertfox.com/forms/29883883 it will be emailed to you automatically (once you click on the confirmation email). Enjoy 🙂
Lacey,
I put my information in at the link and clicked confirm on the email but no spreadsheet yet.
Great article by the way. I read it to my husband last night and we are not sure whether we should sell one of our investment properties. Hopefully the spreadsheet will help with our decision making.
Thanks
Tracy
Hi Lacey
Thanks for spelling out the math in your article. I would like a copy of your spreadsheet to run the numbers on our properties. We go year to year without really knowing how they are performing. Buy and hold is our strategy but that has made it easy to be lazy with the financials!
Craig
Hi Craig, glad you liked it. Please fill out this form and you’ll get a link in your email: http://app.convertfox.com/forms/29883883. Cheers, Lacey
Hi, can I get a copy of the spreadsheet? Thanks
Hi Judy, Please fill out this form and you’ll get a link in your email: http://app.convertfox.com/forms/29883883. It’s a double opt-in, so please be sure to check your junk/spam and follow the instructions (we use double opt-in so no one can sign up someone else’s email without their approval – trying to protect our followers) Kind Regards, Lacey
Hi Lacey. Great article. Can you please send through excel spreadsheet.
Hi, can I get a copy of the spreadsheet? Thanks
Hi Tim, there’s a link at the top and bottom of blog to get a downloadable copy. We get a lot of requests so opted for an automated process 🙂 Cheers, Lacey
Thanks for the article! Could you please email me a copy of the spreadsheet? I’d like to crunch some numbers 🙂
Hi Renee, Happy New Year!
For the first day of 2020, I decided to get the links sorted. I’ve turned this blog into a downloadable .pdf, refreshed the content, and schmicked up the spreadsheet.
Sign up here to get your copy: https://www.moneyschool.org.au/ebook-sign-up-should-you-sell-your-investment-property/
Thanks for you patience. Wishing you all the best for 2020.
Cheers,
Lacey
Having difficulty following the links. Can you please check they are working?
Hi Luke, Happy New Year!
For the first day of 2020, I decided to get this sorted. I’ve turned this blog into a downloadable .pdf, refreshed the content, and schmicked up the spreadsheet.
Sign up here to get your copy: https://www.moneyschool.org.au/ebook-sign-up-should-you-sell-your-investment-property/
Thanks for you patience. Wishing you all the best for 2020.
Cheers,
Lacey
HI I cant find this link at the top and bottom of blog to get a downloadable copy of the excel spreadsheet. Can I please get a copy ?
Thanks
Hi Yogi, Happy New Year!
For the first day of 2020, I decided to get this sorted. I’ve turned this blog into a downloadable .pdf, refreshed the content, and schmicked up the spreadsheet.
Sign up here to get your copy: https://www.moneyschool.org.au/ebook-sign-up-should-you-sell-your-investment-property/
Thanks for you patience. Wishing you all the best for 2020.
Cheers,
Lacey
Hi,
I’ve filled out the form about 3 times now and not seen a spreadsheet – am I doing something wrong? ;-(
So sorry David! We recently updated our website and our email automation system, looks like we broke something. We’re onto it, will send you the live link as soon as it’s working again 🙂 Apologies for the inconvenience. Cheers, Lacey
Hi David, Happy New Year!
For the first day of 2020, I decided to get this sorted. I’ve turned this blog into a downloadable .pdf, refreshed the content, and schmicked up the spreadsheet.
Sign up here to get your copy: https://www.moneyschool.org.au/ebook-sign-up-should-you-sell-your-investment-property/
Thanks for you patience. Wishing you all the best for 2020.
Cheers,
Lacey