Underperforming investment property

Kiwiroos#1 Posted : Monday, 1 October 2012 12:30:06 PM
I have a work colleague who has owned a unit on the Gold Coast as an investment for 15 years. It has not performed well, but is valued at more than purchase price, albeit not by very much. Coupled with the costs involved of keeping it, including recent furniture replacement (it is a fully furnished unit) and body corpoarte fees, it really has become an underperforming investment. At this rate, it will not provide the retirement amount sought. My question is, should he sell now, pay the capital gains tax applicable, and re-invest in a better suburb? I'm not sure what suburb it is in, but I see a huge increase in growth in Currumbin, which may indicate an increase for units generally throughout the coast, or is there still an oversupply problem for units on the coast?

  • Peter Chun#2 Posted : Friday, 15 February 2013 3:48:00 AM

    I would seriously consider it; it would depend on many factors, but at face value, could prove the best way forward. Here’s the thing, as it has underperformed, the best opportunity to recoup the loss of the past 15yrs is to invest in a higher performing property. Get top advice on this as, in my opinion, there are far better rewards in QLD, WA & NSW than Currumbin.

  • Eos Property#3 Posted : Saturday, 16 February 2013 11:24:23 AM

    Like Peter I would toss this one and walk away and re-enter the market somewhere else.

    While simply tossing the property seems such a simple thing to do - it isn't. Your mate needs to step away from the emotion of owning the property and strictly consider it as a business decision and the numbers speak for themselves.

    Let's look at what has happened to date: the property has been held for 15 yrs with minimal growth, holding costs are expensive, the gold coast market is flat, and there seems to be little positive news coming out about the GC property market.

    As Peter has said look outside the GC, and surrounds, and look for something with a value adding component to it.

  • ipropertyinvestor.com.au#4 Posted : Tuesday, 19 February 2013 12:38:40 PM

    As others have said he should get rid of it asap and role the money into a better opportunity elsewhere, GC should not be to much of an issue, it doesnt sound like he has made a lot of money out of the property.

  • Mike Fuller | dsrscore.com.au#5 Posted : Tuesday, 19 February 2013 2:38:26 PM

    You make your own mind up independently - the free dsrscore.com.au compares 15,000 suburbs against 8 key supply and demand indicators and plots their trends lines over 12 months.

    The good, the bad and the ugly suburbs will be reveal pretty quickly in an objective way.

    A summary of the DSR data is available at the back of YIP mag.

    Factor in selling costs and (re)purchase costs and the business case should be clear.

  • Francis#6 Posted : Thursday, 21 February 2013 4:17:31 PM

    Hi Kiwiroos
    I have owned a unit on the GC (Gold Coast) for 5 years which has hardly moved also. I would certainly caution against selling and then re buying on the Gold Coast whether Currumbin or elsewhere because unfortunately the whole Gold Coast has been toxic for a long time. If you do decide to sell head for Sydney or inner Brisbane where there is economic growth. But there is plenty of costs in selling and re buying and I have been hearing some good news from real estate agents on the GC. So I will sit on my GC property for another 2 years and hope that at long last the property market on the GC is finally turning. My rental yield is 6% which is ok. Good luck with your investment property as unfortunately there is always some trail and error involved no matter how well you research.

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