Our 'investment' rental property is still on the market, almost a year after we first decided to sell it off. We had originally bought this property in 2000 with a view to rent it out initially, and then later on demolish it to build our 'dream home'. Our plans changed when we bought our current home (we couldn't really afford to build the sort of luxury home we had in mind when we first got married, especially after DW permanently (?) stopped full-time work after DS2 was born, and the GFC had wiped out most of the net value of my stock portfolio), so we decided to sell it and use the net proceeds to reduce our home mortgage as much as possible. That would free up a lot of cash flow to direct towards other investments - I'm no longer a fan of direct investment in rental properties in Sydney, given the constant headaches of delinquent tenants, repairs and maintenance, and the illiquid nature of real estate investments. It's also hard to see any great potential for capital gains in the medium term, given how expensive the Sydney real estate market appears to be.
We have had a series of 'low-ball' offers in the mid-700s (based on house prices in that suburb my estimated valuation is around $830K-$860K) since the property was put on the market, despite our asking price being 'offers over $830,000'. We had one tentative offer of $810,000 last year just before we changed realtors, but unfortunately that 'buyer' saw our property being advertised on the new agents website with a price guide of 'over $795,000' and reduced their offer to $780,000 before we could even negotiate. That sale might have fallen through anyway, but the new agent's strategy of listing our property below $800,000 (in order for it to be seen by buyers looking for houses under the $800,000 mark) appears to have been counter-productive, or at least very bad timing!
The latest offer we received was for $785,000, and they had rejected our reduced asking price of $825,000 before 'accepting' our 'final price' of $805,000. Unfortunately, as I had told DW, nothing is really definite until settlement day arrives - so I wasn't particularly surprised to learn that the 'buyer' pulled out a few days later. Either they got an unfavourable builders report (I think they may have wanted to renovate while living there, rather than demolishing it and building a new house), or perhaps couldn't arrange (or afford) the finance at that price.
Meanwhile our tenants had to be 'read the riot act' by DW (ie. sent a notice of eviction) when their rent payments fell more than 14 days in arrears. That woke them up, and they finally paid a couple of weeks back-rent last Friday, with a promise to 'catch up' the balance of rent owing this weekend (apparently one of their parents has paid the balance of the outstanding rent via electronic transfer, so it should appear in our bank account on Monday). Provided the tenants continue to pay their rent, the property has a rental yield of around 3.4%, which isn't too bad. Things will get more difficult again if we haven't sold the property by the time their lease expires and we have trouble finding new tenants. Last time the property was vacant it took almost six months to find new tenants!
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