Should we just sell?

Thanks for your replies. I did look at Mt Druitt but as the demographics of the areas are similar, I went for this property as it was a house with land which I thought would be an overall better investment. I'm a bit wary of purchasing units at present as there seems to be overdevelopment in many cities around Australia. I would only really consider it if it was something exceptional. I think the quality of tenants would be similar in both areas.

I have received an application from a tenant who the PM said appeared pleasant and reasonable at the inspection however, they are a couple with 6 kids and both are on benefits with no additional income. I told her I didn't want to risk it. They offered to do some work on the house for free but also wanted a discount as well as some additional work to be done by me (I was going to do this anyway but at a later date). The PM will check their rental history but I'll likely decline unless there was some unusual circumstances. I think the end of next week is my deadline before I proceed with listing it for sale.

All the best cimbom. I am sure, everything will fall in place

Cimbom that's good to hear that you potentially have a tenant. I think it's the exception rather than the rule that tenants are employed there. Do they have any rental history or are they straight from DOH? Perhaps ask if the tenants are prepared to pay by Centapay.

I had a chat with my PM a few weeks back on whether to sell or keep and she said that rentals will get stronger as the year ends. I'd say you still won't find the golden tenants but it could make your decision a little easier.

Maybe even take the tenant on and sell the property? It would definitely be easier to sell with a 6 or 12 month lease in place. Lots of vacant properties on the market at present.

cimbom said:

Thanks for your replies. I did look at Mt Druitt but as the demographics of the areas are similar, I went for this property as it was a house with land which I thought would be an overall better investment. I'm a bit wary of purchasing units at present as there seems to be overdevelopment in many cities around Australia. I would only really consider it if it was something exceptional. I think the quality of tenants would be similar in both areas.

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Cimbom, are you kidding? That is a total misperception. I'm not one of those who flaunt my numbers/income/cashflow, however to dispell this idea, for instance, I've had 57% growth on my first property that I purchased mid 2010 (and another sale next to mine will give me growth to 84% very soon). Mount Druitt doesn't have vandalised houses! It's a great area and has decent people living there. Our tenants have never been a problem! EVER, paid rent on time (not to forget the 9% return on this property) and kept the properties clean. Most are educated people and one even has a business. That's a gross generalisation.

Surely if Ashmont was the 'same' demographic, you won't be facing the same issues.

Further, for a first property - who cares about oversupply if you make money? If you buy for 200k and now its worth 300k, does it matter if there is an oversupply? does it matter if it has a stable tenant and a return you won't see anywhere in a suburb within 45 minutes train to the city in Sydney? Has a westfield too? Has had re-zoning put in place? Has a hospital? Has a TAFE? Schools? Bunnings? Access to Great Western Hwy and then M4/M7 not so far?...........

I would strongly suggest you talk to the likes of Rixter to see how they've done it.......and read a few books on what should make a good IP.

All the best.

cimbom said:

I'm a bit wary of purchasing units at present as there seems to be overdevelopment in many cities around Australia.

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You have tarred the whole Australian real estate market with this statement :-O !!! There are markets within markets. On this basis, your statement doesn't make sense.

He may have a point......all will be revealed by 2018...particulary Sydney and Melbourne!

monalisa said:

You have tarred the whole Australian real estate market with this statement :-O !!! There are markets within markets. On this basis, your statement doesn't make sense.

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How on earth did the tenants manage 6 months of arrears?

I can understand your desire to cut it loose at this point, though I'd be inclined to hold onto it and try to get it rented. In any case I wish you all the best, cimbom.

This is one of the best reasons to have your rentals close to where you live.
No one will look after your properties better than you.

MsAli said:

Cimbom, are you kidding? That is a total misperception. I'm not one of those who flaunt my numbers/income/cashflow, however to dispell this idea, for instance, I've had 57% growth on my first property that I purchased mid 2010 (and another sale next to mine will give me growth to 84% very soon). Mount Druitt doesn't have vandalised houses! It's a great area and has decent people living there. Our tenants have never been a problem! EVER, paid rent on time (not to forget the 9% return on this property) and kept the properties clean. Most are educated people and one even has a business. That's a gross generalisation.

Surely if Ashmont was the 'same' demographic, you won't be facing the same issues.

Click to expand...

This is the worst tenant we had since buying the property. Previously, we may have had a week or two of arrears or some minor cleaning to do but nothing at this level at all. There are many people on these forums who have IPs in the same area who also haven't had these kinds of problems. There's a bit of luck involved too. We have previously had tenants who were employed and working in the local hospital. I have relatives who have IPs in suburban Melbourne who've also had their houses damaged by tenants in the past. The demographics of both are in a similar (though not "same" bracket) with Mt Druitt being a bit higher ($200/week higher income according to Census data from 2011 - about $800 in Ashmont average compared to $1000 in Mt Druitt).

Further, for a first property - who cares about oversupply if you make money? If you buy for 200k and now its worth 300k, does it matter if there is an oversupply? does it matter if it has a stable tenant and a return you won't see anywhere in a suburb within 45 minutes train to the city in Sydney? Has a westfield too? Has had re-zoning put in place? Has a hospital? Has a TAFE? Schools? Bunnings? Access to Great Western Hwy and then M4/M7 not so far?...........

I would strongly suggest you talk to the likes of Rixter to see how they've done it.......and read a few books on what should make a good IP.

All the best.

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Well oversupply certainly impacts value and will continue to do so. It has in Canberra, for instance, even in inner-city blue chip areas near high paying employment and lots of amenities. We didn't start quite as early as you so I don't think the timing would've been on our side as much. We purchased this property as a long-term hold and I thought it'd be good in that regard but this particular tenant just set us back quite a lot. I think you've done great for yourselves and I wish you the best. However, given our tight financial situation, we made the decision that we thought was best at the time. Once my husband starts FT work, we'll have a lot more resources to invest in "better" areas. Obviously, good IPs are easier to buy when you have good cashflow. Thanks for taking the time to write a detailed response

beachgurl said:

Cimbom that's good to hear that you potentially have a tenant. I think it's the exception rather than the rule that tenants are employed there. Do they have any rental history or are they straight from DOH? Perhaps ask if the tenants are prepared to pay by Centapay.

I had a chat with my PM a few weeks back on whether to sell or keep and she said that rentals will get stronger as the year ends. I'd say you still won't find the golden tenants but it could make your decision a little easier.

Maybe even take the tenant on and sell the property? It would definitely be easier to sell with a 6 or 12 month lease in place. Lots of vacant properties on the market at present.

Click to expand...

We have had employed tenants previously but the rental market is very slow at present which makes this issue worse. They are renting privately which I guess is a good sign. My PM is waiting to get their rental ledger to see the full payment history as well as all their other supporting documentation. I will wait to get this info before deciding.

monalisa said:

You have tarred the whole Australian real estate market with this statement :-O !!! There are markets within markets. On this basis, your statement doesn't make sense.

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That's why I qualified my statement by saying "unless it was something exceptional". In certain situations/places, it wouldn't be the case but I don't think it's the rule.

Fifth said:

How on earth did the tenants manage 6 months of arrears?

I can understand your desire to cut it loose at this point, though I'd be inclined to hold onto it and try to get it rented. In any case I wish you all the best, cimbom.

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Long story - tribunal hearing got postponed, they then gave the tenant extra time and when we finally got the notice to evict them, they refused to budge so we had to wait to get the sherriff involved (and later the police).

kathryn d said:

This is one of the best reasons to have your rentals close to where you live.
No one will look after your properties better than you.

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I guess it would help in that regard but Canberra is a lot more expensive. I prefer to diversify as well.