This isn't really a landlord whine - although some will probably treat it as such.
It is simply a question - is anyone else thinking of selling up now after all the rate rises?
Been renting out our investment property now for about 3 years.
Initially it was roughly neutrally geared - but now with all the recent rate rises it is substantially negatively geared, even with a rent increase each year.
It is getting to the point that I am seriously thinking about just selling it and was wondering if anyone else is too?
Sure, this is exactly the way the market is meant to work - and perhaps everyone should have seen this coming and locked in their rates for x years - but my interest rate has gone from about 2% to about 6% quite quickly, and trying to keep the rent at a manageable level means this is becoming a losing game - especially in Perth where real estate hasn't boomed in value like it has in some Eastern States markets.
If I have to sell, I have to sell - but it likely means one more property out of the rental market.
Am I alone?
Is Anyone Else Thinking about Selling Their Investment Property?
Comments
The best outcome would be for you to be able to sell for a small profit, and for someone to be able to buy their first home from you - taking one more person out of the rental market. In all likelihood though, it'd end up being bought by yet another investor… Our obsession as a nation with property as an investment is becoming a bigger and bigger issue.
It's funny that people think that if investment properties are sold then they would be bought by first home buyers.
The reality is that it's much more likely to be sold to an international property investor or a local property investor. I don't know of anyone that can afford to enter the market right now as a first home buyer.
Yeah, that's the sad reality… lots of people trying to jump up at the ladder being pulled up by the earlier investors behind them.
I'm in a fortunate enough position that even without parental or partner help I'll likely be able to utilise most of the government's schemes (FHSS/FHG/etc) when the time comes - but even then, I recognise that there are a lot of people who won't be able to sacrifice any more money into their super, or even sacrifice any money at all due to life circumstances. It's definitely still possible for average people to enter the market, but anyone who doesn't agree that it's at least MUCH harder is deluding themselves.
If its a first home buyer buying the place then chances are they have been living with mum and dad to be able to save up enough for a deposit .. or from overseas.
Most likely case .. one less place to rent without a reduction in rental demand.
It was always a dream to own your own house, not it is to own someone elses.
It doesn't "likely" mean "one more[?] property out of the rental market". I mean, what? Is the purchaser going to ship it off to China or something?
All that selling your property means is that it will either be purchased by another investor, or purchased by a former or potential renter who is now no longer competing with other renters for rental accommodation.
In any case, you aren't going to sell, you just want another opportunity to say "my investment property". But seriously, I hope you do. If more investors get out maybe the price of housing will come off a bit - supply and demand and all.
Have your landlord whinge if you must, but don't do it while pretending you're some kind of saint in the process.
It is getting to the point that I am seriously thinking about just selling it and was wondering if anyone else is too?
Yep, three properties gone 12 - 18 months ago :/
Gold, Silver, Fully Franked shares and Crypto have all outperformed what I would have made from property in the last 12 months!
If only more people followed in your footsteps.
But now you don't get to make posts complaining about how the tenant got something repaired without permission and now wants money, or how they trashed the place and didn't pay rent for 3 months.
Hehe, was one of the reasons for the decision to get rid of them ;)
Had a hell of a time with a tenant and pet damage a couple years ago :/
Just sold ours to a first home buyer, bought 5 years ago. Sold because payments were cutting into our budget too much even after tenant’s rent payments.
Although seemed to have gained a lot in value, when I did the math on profit after fees and all the interest and mortgage repayments we were only just ahead. I think it may be true what I’ve heard that minimum ten years holding investment property gets a better outcome.
The small profit plus having to deal with real estate agents when buying and selling made me think fully franked dividend shares is a much better bet for future investments.but it likely means one more property out of the rental market
And into the home owner market. Thankyou for nominating for tribute….
You could also look at it as taking away a property from the poorer people who haven’t managed to save a deposit /don’t have the income to buy a house and who therefore must rent. Thus rewarding the wealthier/those with wealthier parents.
Especially if it’s a 3 or 4 bed rental house, which has now turned into a 2 person owned house, thus adding 2 people to the renting market but reducing available properties (interestingly, if Australians had the same people per household today as pre COVID, we would have almost 200,000 more houses available)
All depends on which perspective you take
Mate, if they were wealthier then they would have outbid them for rentals anyway, so it's the same outcome
Those people who now bought, are no longer renting and the place they were renting will go to the next person and so on.
That’s not how it works because the people who bought also took a house out of the rental market. So at best no change. And if the person who bought moved from a 3 person household to a 2 person household, there is now one more renter and one less house.
@dtc: You’re acting as if the property someone was renting prior to buying just disappears.
Even in your use case, the third wheel would likely find another share house, I very much doubt someone’s going to pay full rent in a larger place.I agree it’s likely neutral but that’s my point. You’re not losing stock, it’s just transferring.
" the poorer people who haven’t managed to save a deposit /don’t have the income to buy a house and who therefore must rent."
I would love to read REAL, serious, reliable, trustworthy statistics of how many are they.
That will put an end to the fantasy that "renters rent, hence they must be poor".There are many, many people on government housing waiting lists, where do you think they live?
@larndis: Where? In dwellings like you and I.
Rented, bought, invited or squatted.The question is about how poor they really are.
Getting a housing commission does not mean the recipient is dead poor, it is that he/she/they just qualify for it. Even for some professions. Ain't poverty.@LFO: Sounds like you live an incredibly sheltered life and have absolutely no idea what it's like for the bottom 10%. Yes, they are 'actually' poor
@larndis: Sounds like you live an incredibly depressing, negative life and have absolutely no idea what it's really like for the whole 100%. Yes, there are 'actually' some poor but not as poor as some will wish them to be.
Look it's not all bad news OP. Perth prices are at an all-time high. Here is a media article on it:
https://www.9news.com.au/national/australia-property-prices-…
I keep a pretty close eye on the Perth market and supply is very limited. This means you should get a good price and quick turnaround.
Yes this is the average case and your case might be different. But there are many predicting interest rates will stay higher longer than previously thought. Like losing your job, it may be upsetting to sell, but it's better to sell in a rising/peaking market than sell in a sinking one.
Personally, I think the recent inflation will continue to drive house prices up in Perth and other non-East Coast cities over the next 1-5 years. Some suburbs are definitely under-valued and by selling now you could be missing out on some good capital growth.
This is a pretty terrifying prospect. People have choices other than Australia for housing too and only a handful of roughly 196 have more expensive housing (e.g. Switzerland, Hong Kong, Singapore, Japan, Monaco, Vatican City, Taiwan and South Korea).
The Reserve Bank and its governor have mentioned house prices in recent statements - so they appear trying to contain house prices. Let's hope they succeed.
Also keep an eye on Christopher Joye who went from one of the housing markets biggest bulls to one of its biggest bears. So far he has mostly been on the money:
https://www.livewiremarkets.com/wires/house-prices-to-get-wh…
There is an argument that the demand from the East-coast will scatter to the West. I don't think we're in for a widespread collapse but I do think we could eventually broach 2019 prices. Keep in mind interest rates are now 3 to 5.5 times higher. The horror is that what sounds like quite a modest prediction actually equates to a 25% fall (peak-to-trough) - though I suppose we have already regained some of that territory. In Perth a reversion to 2019 would mean the market cools roughly 17% (now-to-trough).
You have to factor in that RBA is slowly tackling inflation while the government is increasing inflation (immigration/submarines/cutting taxes).
Which means the rates are going to keep going up and up. I don't see it going down any time soon and the historical rate average was 6% I heard? So, still more to go.
Try to get it paid off ASAP, raise rents as much you can or sell it (but do it quickly before others crash the market).
This isn't really a shareholder whine - although some will probably treat it as such.
It's simply a question - is anyone else thinking of selling up now after all the rate rises?
Been collecting dividends from Telstra now for about 3 years.
Initially dividends roughly covered the interest on my margin loan - but now with all the recent rate rises dividends aren't even coming close to covering my interest bill, even with dividends increasing each year.
It's getting to the point that I am seriously thinking about just selling the shares and was wondering if anyone else is too?
Sure, this is exactly the way the market is meant to work - and perhaps everyone should have seen this coming and locked in their rates for x years - but my margin loan has gone from about 2% to about 6% quite quickly, and trying to cover the margin is becoming a losing game - especially in telecommunications shares, which really haven't boomed in value like mining or banking.
If I have to sell, I have to sell - but it likely means one more investor out of the share market.
Am I alone?
but my interest rate has gone from about 2% to about 6% quite quickly, and trying to keep the rent at a manageable level means this is becoming a losing game
Join the rout if your area is in demand, just hike your rents till you're making money.
Sold ours in Sept last year and made a bit of profit. We never intended to rent out as that was our first home but some circumstances led us to moving into my parents. When we moved out in 2019,we would have lost at least 50k selling in that market.
We sold ours because it was just too much drama, agents and tenant working together to suck money out of us (they are in the same industry in the same area), wrecked the house before leaving and then threatened to take us to court for wanting to hold the bond until they frigging cleaned the house. We probably could have charged a butt load from what I see people getting charged for sh'tboxes but after we sold it, we've had 0 stress and heartache and now my partner can take a year off work to spend time with the kids.
Yeah, I use to only be out of pocket $2-3k annually before negative gearing but now it's up to $10k+.
Got my last rental property under contract with a First Home Buyer so it's an ideal outcome. Looking forward to one less property to look after.
I’d only see ours if I financially had to as interest rates will come back down eventually.
If you can hold it , you should for capital gain. We sold an apartment 2 years ago, the value has gone up 40% since , but this depends on the suburb as well.
Just like they say on Reddit :P
Diamond Hands and HOLD !!!
Other landlords are increasing rent by up to $150/week
There seems to be an Ozb consensus that it is fair to do so in other threads
Keep in mind if you sell someone is gonna charge the higher rent anywayI disagree as this is not fair for the tenant as you have taken the investment risk not the tenant!
If you are already charging market rent then too bad
Reportedly, the next two quarters will likely see unprecedented numbers 10,000s of properties dumped onto the market by investors.
Logically, if you want a fair price for your investment property, you will likely get a decent price either now, or in another 12-18months when the market cools off.One example of a massively underperforming property, but fully tenanted:
https://www.realestate.com.au/property-apartment-vic-chelten…
realestate.com.au gives Estimated repayments of $19,836 per month
the current tenants are collectively paying $116,000pa ($9,666 per month)
shortfall approx. $10,195 per month, and set to rise further soon, thanks to Lowe and Chalmers
Landlords are getting a bad rap at the moment, but many properties in Australia are in dire straights.In some states, you can only increase rent once in 12months, so your only options would be:
- divest your properties
- hold it until 12 months goes by then pass on those increases (which risks losing the tenant if they can't afford it)
- give a notice to vacate for improvements/etc, then sign a new tenant with a higher rent (I won't go into the ethics of that, since I've been the tenant in this scenario a few times).
We sold ours years ago, way to soon in hindsight but not looking to get back in just yet. If holding the property is causing you grief then offload it while you can and a few percentage points in a term deposit. If you are on easy street and can weather the storm or pay down the mortgage then you have more choices.