They say if a property isn’t performing you should ditch it. But that’s easier said than done.
BY LAUREN CROSS
There are some great opportunities out there right now in realestate.com.au land. No matter where I seem to look (mining boom areas, interstate, even coastal areas that have pulled back!) I keep finding properties that look great, at least in picture. The problem is, I’m stuck. My fiancé and I are pretty much maxed out when it comes to negative gearing and we have a reasonably big personal home loan too. So yes we could borrow again but being in the position we’re currently in, the property would probably have to be positively geared.
Which brings me to my new dilemma – there’s an investment property we own in Brisbane that’s just not moving. It was purchased in the 2007 peak and has been going backwards ever since. I keep wondering to myself – should it stay or should it go?
I’ve heard many people say you should ditch a non-performing property so you can move on to better opportunities. It sounds easy enough, but once you consider the real estate agent fees you’ll have to pay, the stamp duty fees on the next purchase and the psychological frustration, it just seems to me that there isn’t much point of wasting all that money for nothing. Why sell at the bottom of the market if you don’t need to? Of course, we could renovate the property to boost its price, but we don’t really have the cash to do that right now and I’m not one to spend my free weekends painting or paving! Another thing is, the property isn’t actually holding us back – it just means we can’t heavily negatively gear for awhile.
Realistically, week in and week out, I guess it’s not making that much difference to our lives and we’re not about to go broke. Besides, once the Brisbane market comes back up it will rent out for a reasonable rate and we’ll always be able to find a tenant pretty easily. In fact, we’re very fortunate to have a great tenant at the moment and it’s a hassle-free investment. In saying that though, the property is probably in an area where it’s better to rent out than live in. In other words, this area isn’t about to be in API’s HOT 100 anytime soon!
So here we are, forced to wait a few years perhaps until the property’s price bounces back. In the meantime, I’m seeing some great buys that I would just love to get my little hands on!
What do you think we should do? Should we sell the property and look for opportunities elsewhere, or should we hold on, knowing that it’s not a drama to keep the property in the meantime? Perhaps you also have a similar story or frustration at the moment?
Lauren Cross is a journalist/subeditor of Australian Property Investor magazine, www.apimagazine.com.au