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To sell or not to sell?

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cully | 09 Jan 2016, 10:14 AM Agree 0
Just interested in what people think about this situation.

Currently have 3 investment properties:
1. Value around $400K- owe $100k- Equity $300K
2. Value around $330K- owe $256K- Equity $70K
3. Value around $480K- owe $495K- Equity -$15K

House that we mortgage is valued at about $900K- owe $190K.- Equity $710K

Total Equity $1.065m

Plan to extend home in two years and likely to cost about $300K.

I am thinking of selling the investment property with $300K equity and this would nearly cover the cost of the extension minus the CGT etc. The other option is to just re-mortgage and have a mortgage of approx. $450K which allows us to keep the investment property. This investment property currently earns about $12K a year after expenses but before tax return.

I am really not keen on selling the investment, but could do that to maintain a small mortgage on main home and then just buy a new investment property.

We can easily manage a mortgage of $450k if we decide that.

Love to hear peoples thoughts and if they have had similar situation.

Cheers

matt
  • WayneR | 02 Mar 2016, 08:51 PM Agree 0
    Hi Matt,

    I'd probably hold the investment properties as they are (especially if they're positively geared and in a good location).

    In a situation like yours, I'd propbably:
    1. refinance the principle home, draw out equity to renovate house (will this add value to your principle residence?)
    2. leave balance equity you've draw out through the refinance in an offset account until you find an investment property
    3. use the balance funds from the refinance to buy the next investment property.
    4. Use the cash flow from the investment properties to pay off the loan on the home.

    The interest payments for the cash used to renovate the home cannot be deducted, but the interest payments on the cash used to buy the next investment property can be. Talk to your accountant about this.

  • FinanceRaffles | 07 Apr 2016, 01:19 PM Agree 0
    I guess, you should consider many things before selling your properties. You must know the value, the taxes and everything to your advantage. You might as well ask others opinion too especially professionals who is more into a real estate business.
  • maxC | 06 Sep 2016, 01:35 PM Agree 0
    I think before selling your property you must know everything.
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