I bought a ‘blue chip’ property as my first investment and pushed myself to the limit. I’m struggling to make repayments. Is it worth selling up?
I am worried that you have bought an investment property without doing the most important thing first – becoming educated. Already you are suggesting you sell up to buy something smaller – the size of a property is not a feature which makes it good or bad.
The first thing you must do is determine just how difficult your financial circumstances are right now. Will a new budget allow you to stay in this market, or will the inevitable end be that you get so far behind in repayments that you have a forced sale on your hands? If this is where you are headed then it’s moot whether this property is ultimately a good investment or not – you just cannot afford to keep it.
If you have determined that you can still keep up with repayments, your next step is to ascertain whether you have a good investment, or a lemon. The term ‘blue chip’ means nothing these days; it’s frequently a term spruikers use to sell property. True blue chip exists in an area rich in growth drivers and this can happen anywhere, not only CBDs. In fact, at the moment our large regional centres where industry is diversified present the best buys right now.
If it isn’t stacking up, you may need to sell, cut your losses and buy again.
Margaret Lomas, founder, Destiny Financial