Hi All,
Bought a unit in Australia as investment back in 2015. In New Farm, QLD to be precise.
Turns out that it has currently one of the highest rental vacancies of the area.
It is negatively geared and I have used some of the equity of my PPOR to buy it, 100% LVR on this particular property.
At this stage, it costs me around $2k to $3k per year (Maybe more in future if rent continues to go down) to keep with current market conditions, before the expected rise in interest (another hit potentially).
It has barely kept with inflation, I bought it for $495k (below valuation of $505k) and is now worth maybe $510 to $520k.
If I sell now, I would have lost $25k of purchasing cost and would still pay around $20k to the bank to close the loan - approx.
The reason for me to consider selling is that the rent will not increase in the next few years I believe, and It see limited CG in the next few years.
The other reason is cash flow.
The reason to keep is that we might leave Australia and the other unit we've got will balance this loss, and that could leave a legacy to kids when we pass (I'm only 37 now though!).
I would add that, for now, we're on reasonably high pay so marginal impact to that regard.
Question:
1/ Would you sell it and take the $20k hit, but bank the $2/$3k per annum into value shares or similar that actually make money? So 10 years to "recover" from this
2/ Stay with the very long term strategy with the hope not to count on this money until very late in life, and have a legacy for kids