How I can seek equity for big flat section can-not- subdivided House

[jhab]

I purchased one 3 bedroom house in the peak of price 2 years ago, the house in Zone5 has only 908m2 under Auckland City Council, I went to City Council to ask advices to expanse the house or put more sleepout last Year, It seems technical difficulties to handle? such as: expanse only share one Kitchen or same material with the main house.....The house made me very headache as of big loss per week, do someone has some suggestions to handle it?

[Keithw]

Here's my ideas that you might like to think about

Is it in a part of town that would attract big families ?
If it is, the sleepout could be a way to get extra rooms to rent.
Even without the kitchen the extra rooms will bring in more rent.

Rent by the room

can you buy any parts of land from the neighbours, enough to make your section large enough to subdivide.

how old is the house ? knock it down & build 2 new ones
Move existing house to make room for a second.(maybe cross lease the sections)

Borrow against it to buy something else (ie using the equity you have in the place)

are you claiming the losses against other income ?
Are you using IR 23b to get back tax in each pay packet (assuming you are working) instead of waiting until the end of the year ?

[Davo36]

Everyone became a property investor 2 years ago. Sigh.

My advice mate, quit before things get worse. You should just sell it and chalk it up to experience.

Next time, work out the figures correctly. Don't just buy property because everyone else is.

David

[Austrokiwi]

Everyone became a property investor 2 years ago. Sigh.

My advice mate, quit before things get worse. You should just sell it and chalk it up to experience.

Next time, work out the figures correctly. Don't just buy property because everyone else is.

David

Agree. Do a google search on dollar auction ( game theory).
The basic underlying principle is people start playing their losses making the situation worse ( financially). its better to cut free and move on.

[Keithw]

Hey guys, Austro & Davo, I know you have very firm opinions on things, but do you think you do anything to encourage new users of this forum when you attack them on their first post, when in most cases they came here thinking they might get some help with a situation they either don't like or are not familiar with. ?

If you firmly believe the best option is for the newbie to sell up (which I fail to see you have enough info to make that judgement) then wouldn't it be more useful to describe what alternatives there are to consider & why selling up is the best ?

If you want this forum to just become a whinge group about mistakes people may have made in their lives, or an Anti property forum, just keep on acting the way you do to newcomers.
Eventually you will drive away all but the seasoned old timers that are strong enough to make up their own minds and take your comments as the cautionary ones they are, rather than all knowing definitive ones they purport to be.

FYI
I first visited this forum a couple of years ago & very quickly lost interest when I saw more judgemental claptrap than useful commentary.
I returned around 6 months ago & noticed a very different atmosphere with a change of posters and attitude.

[jhab]

Thanks Keithw, the ideas are very positive! I' ll think about it.

Any way, thanks for David & Autro too. Good Idea to cut up the loss, however, I want to hold the property to claim the loss.

[Austrokiwi]

Hey guys, Austro & Davo, I know you have very firm opinions on things, but do you think you do anything to encourage new users of this forum when you attack them on their first post, when in most cases they came here thinking they might get some help with a situation they either don't like or are not familiar with. ?

If you firmly believe the best option is for the newbie to sell up (which I fail to see you have enough info to make that judgement) then wouldn't it be more useful to describe what alternatives there are to consider & why selling up is the best ?

If you want this forum to just become a whinge group about mistakes people may have made in their lives, or an Anti property forum, just keep on acting the way you do to newcomers.
Eventually you will drive away all but the seasoned old timers that are strong enough to make up their own minds and take your comments as the cautionary ones they are, rather than all knowing definitive ones they purport to be.

FYI
I first visited this forum a couple of years ago & very quickly lost interest when I saw more judgemental claptrap than useful commentary.
I returned around 6 months ago & noticed a very different atmosphere with a change of posters and attitude.

Sorry I wasn't aware my post came across that way. I was trying to point out that sometimes the best way of dealing with a situation like that was to get out before it gets worse......Check out the dollar auction and see what I was referring to.

[Keithw]

Fair point Austro, and sometimes getting out is the best option, but perhaps a few more words about why you think that, would present the argument as a well thought out strategy rather than a possible critisism or "kick the guy in the teeth when he is down".

As far as the $ auction goes, I see that as just a marketing ploy to try to generate interest in a bad market for sellers. & that's what it did. The one I watched got lots of bids, and got a pretty good selling price in the end I believe.
I think there are other $ auctions in the pipeline, as I get emails from the guys from time to time.
I don't see a $ auction as a sign that they are desperate to sell at any cost, even though I have witnessed many others who are.

The way I look at this is :
is it better to take a known 100k loss now,
or hold on for 5 years at a cost of 20k per year (ie slowly paying the 100k, along with the tax advantages), for the probability of recouping the 100k in 5 years time, & hopefully making a profit.

[Austrokiwi]

Dollar Auction

I may not have communicated well: Check this link out. The dollar Auction was a game invented by an economic theorist to illustrate how people sometimes started playing against their losses and end up paying more for what they want than it is worth:

http://www.heretical.com/pound/dollar.html

[SuperDad]

jhab,

You say you are making a big loss per week.

Someone else asked whether you have applied for a special tax code using the IR23BS form.

Are you paying interest only on your loans? If not, changing from principle and interest repayments to interest only repayments will increase cashflow.

If you sell, will you realise a loss, or will you still come out ahead?

Paul.

[Jabroni01]

The way I look at this is :
is it better to take a known 100k loss now,
or hold on for 5 years at a cost of 20k per year (ie slowly paying the 100k, along with the tax advantages), for the probability of recouping the 100k in 5 years time, & hopefully making a profit.

That's the way I look at it also, I don't know your specific details and I'm here learning myself. But I've always thought of property as a long term plan so if you are able to stick it out, why not wait if you can handle it financially in the short term.

The doom and gloom comments and how things are in the present will pass (thats a big I HOPE it doesn't take too long), the worst thing you can do is panic and make a decision based on fear due to all the negative press and comments you see here and in the media.

Any way I hope things do work out and you can find some good advice for your circumstances to base your decision on.

Jabs

[Davo36]

Well KeithW, I suppose I could have spoken in a nicer way. I wasn't trying to be rude, but I was being concise.

But my criticism was at least constructive. I did say "chalk it up to experience" and "next time..." so I wasn't saying this person shouldn't ever buy property again.

I was in fact saying they should just think about what they are doing next time. It's not a given that you can just buy property and make money.

The last line in the original post saying it is a big headache for this guy and he's losing money each week to me means that he needs to get out fairly quickly. In my opinion, there's no point losing money and sleep each week in the hope that you can turn it around in the long term. It may take years to do that. Not worth it emotionally or fiscally.

Better to take the lesson now, learn from the experience and do it differrently next time.

David

[Keithw]

Better to take the lesson now, learn from the experience and do it differrently next time.

Perhaps - if it is a definite lost cause.

whereas I would not give up fighting until I knew I had looked at all possible alternatives, tried a few & learnt even more about how to adapt and improve what might be a bad situation into a not so bad situation, which I think is what the original idea behind the starting post was.

Remember, we all have very different pain/ financial loss ratios.
Some (probably like me) are prepared to put up with a lot of pain/ hassle before conceding to considerable financial loss.
While others will have a very low tolerance to hassle, and be prepared to sacrifice money for their piece of mind, as you suggest.
It is from these people that we pick up our bargains, while people like me might be labelled "unrealistic vendors", refusing to relinguish unnecessarily.

[Davo36]

Yeah OK, I agree with that. I think I would have much less patience with a property like this then you would Keith. I would rather cut my losses and look for another. otherwise you're spending a lot of time and effort trying to turn a make a silk purse out of a pig's ear.

It really depends on how much it is costing. Financially and life-wise. If it's costing say $80 a week, it may be worth hanging on to. After all that's what many people's "investments" are costing them. But if it's costing $350 per week then it'd have to be gotten rid of unless jhab is very wealthy.

OK JHab, I do have a couple of ideas:

• Have you looked into refinancing at a lower rate? Mortgage rates are much lower just now and that may help you a lot.
• Read some books. Not by the ra ra crowd (you know, retire in 3 months kind of rubbish) but sensible property investment books. I would recommend: Martin Hawes, Olly Newland, Bob Jones, Empower Education books etc.

And remember property investment takes years and often decades to give good returns.

David

[jhab]

I ll contact my accounter for IR23BS today, thanks for good informations for all.

Regards for this property, I think my timing is not correct, I got burned for it, just like David mentioned, read more books, stick up my buying rules-thanks. I still purchase more in the future with my rules,but have to wait the property refinance this November as of my 2 years fix rate, maybe my lost will be released under 100 dollars gap.

Tks a lot for anyone.

Jhab