Little advice on the keep/sell debate

[jesseliz]

So my husband and I have a rental property in Taranaki. Hastily put out to rent when we moved out after 3 years of living there (we moved). Our experience as landlords has been far from ideal and we are tossing around the idea of selling. We've had it nearly 6 years, bought it when you could still buy a house with 20% deposit, and the GV has gone done.
In the last few months in particular the maintenance has started to become costly (highlights would be a blown hot water cylinder and a busted underground cable), tenancy has been patchy and it's caused us a great deal of stress.
However, we also acknowledge that if we were to sell now we'd be no better off than when we first bought it (we bought young and only really because house prices were so good in Taranaki), and that it's incredibly valuable from a financial point of view to have an asset - especially if we want to invest further down the line (farm type stuff).
We haven't been able to come to a conclusion on this - so a) any advice gratefully received and b) where would be a good place to go for some professional advice on this - accountant? financial advisor?

[Leftette]

It's impossible to say without knowing:

a) the numbers
b) your position and goals

[jesseliz]

It's impossible to say without knowing:

a) the numbers
b) your position and goals

Thanks Leftette,
Fair call
Without going into too much detail - we're talking small fry (very average, very 70s, 3 bedroom house in an average area etc).
Our goals are around progressing in the dairy industry - sharemilking etc. We really only have the house by default and don't want to be property investors - perhaps except in so far as it helps our progression in farming, financially. I just worry it's going to be more of a liability than an asset!
Again, if there's anyone we can go and see for analyzing the numbers - I'd love to know who - it's hard to know where to start

[elguapo]

If it's not making a return and causing you stress then it's more likely a liability than an asset. I can't really see how useful it would be for getting a farm, that's a whole different league compared to a basic house, even in Auckland.

[ramong]

financial advisor?

Best advice i can give you is to stay away from all financial advisors. You are better off "studying" wealthy people yourself and do what they do.

[elguapo]

You are better off "studying" wealthy people yourself and do what they do.

Do what they do? Like buy a gold plated bath tub, or 400ft mega launch?

[ramong]

well they certainly buy that stuff with their excess cash. So, yes do that by all means IF you have excessive cash.

[BigDreamer]

Best advice i can give you is to stay away from all financial advisors. You are better off "studying" wealthy people yourself and do what they do.

Speaking from experience, ramong?

I'm interested to hear more. I have never engaged a financial adviser but keen to learn more about their usefulness. I do recall listening to Robert Kiyosaki and he did not speak fondly of financial advisers as well.

[ramong]

Speaking from experience, ramong?

I'm interested to hear more. I have never engaged a financial adviser but keen to learn more about their usefulness. I do recall listening to Robert Kiyosaki and he did not speak fondly of financial advisers as well.

When i was 19 i wanted to invest in retirement. The financial advisor told me i had to invest in a fund (or whatever they called). The fund was to expire when i was 65 with $250k in cash paid out. After 9 years of paying into the fund, i enquired as to what the value was : I had paid in $12k and the cashout value was $9k. after seeing that i had less in their than i had put in I cashed out and decided to invest in property instead. 9 wasted years.

Another financial advisor had me invest in a syndicate where a section of land was purchased with the goal to subdivide, cut trees and sell the land. She claims that she is not responsible for the outcome, rather only selling the investment. Well the investment has been 10 years and no results...nothing. 10 wasted years.

Financial advisers are a waste of time. Learn how to make money and you will do better than them.

Well, this thread isnt about me, back to the topic of

jesseliz's buy or hold

[Rosco]

So my husband and I have a rental property in Taranaki. Hastily put out to rent when we moved out after 3 years of living there (we moved). Our experience as landlords has been far from ideal and we are tossing around the idea of selling. We've had it nearly 6 years, bought it when you could still buy a house with 20% deposit, and the GV has gone done.
In the last few months in particular the maintenance has started to become costly (highlights would be a blown hot water cylinder and a busted underground cable), tenancy has been patchy and it's caused us a great deal of stress.
However, we also acknowledge that if we were to sell now we'd be no better off than when we first bought it (we bought young and only really because house prices were so good in Taranaki), and that it's incredibly valuable from a financial point of view to have an asset - especially if we want to invest further down the line (farm type stuff).
We haven't been able to come to a conclusion on this - so a) any advice gratefully received and b) where would be a good place to go for some professional advice on this - accountant? financial advisor?

Hi Jesseliz,

What is the property costing you each year? And if interest rates go up further?

I presume the property is losing you money, so therefore you also need to consider the opportunity cost of having your money tied up in this property vs some other investment.

How much do you expect this property to gain in value over the next say 5 years?
- great capital gain as amazing area etc?
- or low capital gain
- or no capital gain
- or even decrease in value as township dieing?

Then compare the cash profit vs the potential capital gain.
- if for example amazing auckland property that you think was going to jump in value, you might take a cash loss if you had good secure income to support the loss
- if for example it was a crap area, where property prices are more likely to go down then up, then why would you keep it if it is losing you money each year?

Ross

[BigDreamer]

When i was 19 i wanted to invest in retirement. The financial advisor told me i had to invest in a fund (or whatever they called). The fund was to expire when i was 65 with $250k in cash paid out. After 9 years of paying into the fund, i enquired as to what the value was : I had paid in $12k and the cashout value was $9k. after seeing that i had less in their than i had put in I cashed out and decided to invest in property instead. 9 wasted years.

Another financial advisor had me invest in a syndicate where a section of land was purchased with the goal to subdivide, cut trees and sell the land. She claims that she is not responsible for the outcome, rather only selling the investment. Well the investment has been 10 years and no results...nothing. 10 wasted years.

Financial advisers are a waste of time. Learn how to make money and you will do better than them.

Well, this thread isnt about me, back to the topic of

jesseliz's buy or hold

Thanks for sharing. Makes sense as even Robert K said the only prerequisite to become a financial adviser is attend a 6 months course.

In regards to the buy or hold post, Rosco had good points in needing to compare the cash profit vs potential capital gain to help with making a decision.

[crashy]

I qualified as a financial advisor so I know the mindset. The trouble is, they tend to be cold about the figures, ignoring where the investment may be in its cycle. They always assume long term investment and returns. But if you buy at the top of the market, and the advisor would have no clue about that, long term may in fact provide a loss. Basically, wasting your time consulting one on this issue.

[Maccachic]

Jesseliz - Im guessing you aren't currently using a property manager - by doing so you may eliminate some of the stress - if the numbers work.

[artemis]

Sometimes the return on investment can be very good on regional properties. My suggestion would be to set up a spreadsheet to set out all the projected rental income (allowing vacancy time) and all the outgoings, including property management and tax plus or minus. Free spreadsheet programmes available online eg Google Drive, if you don't have one. Or there are some here which may get you started.

http://www.propertytalk.com/forum/showthread.php?283-Property-Web-Links

That should help you see whether it is financially worth keeping. Then factor in stress, time and anything else you want to so you can make a final decision.

Not everyone is cut out to be a landlord, and experienced ones will tell you tenant selection is absolutely key. Sounds like you may have had issues with that in the past. Next is knowing the rights and responsibilities of the parties, and keeping on top of every situation. Most tenancies are just fine, and once established cause little trouble as long as you check the rent every due date and follow up, and do quarterly inspections.

About property managers - quality follows the normal distribution curve - a few fantastic or dire, most in the middle. If you go down that route, choose carefully. Otherwise, if deciding on DIY, see it as a useful learning experience and ask for advice in these forums if you need to.

[Perry]

Those that know - do; those that don't - advise.

Best advice I can give you is to stay away from all financial advisors. You are better off "studying" wealthy people yourself and do what they do.

Speaking from experience, ramong?

The financial advisor told me I had to invest in a fund (or whatever they called). I had paid in $12k and the cashout value was $9k.

I do recall listening to Robert Kiyosaki and he did not speak fondly of financial advisers as well.

If I recall aright, Kiyosaki said something like: if they were a financial
success, they would not be financial advisors, AND ask them how
much/many of the real-steal-deal whatever they'd bought, that they
were encouraging you to invest in.

So I agree - take financial advisors with big grains of salt.