I got caught up in the mining boom and bought an investment property in Karratha, WA, at the peak. While the economy was booming it was great, but now rent is just 25 per cent of what I used to get and the property has halved in value. I have to fork out $200 a week to cover the interest-only loan, on top of rent, insurance, rates, etc. It is crippling. Luckily, I had paid off the mortgage on my home. I am thinking my only option is to ride it out, hoping it will eventually go up again. What else can I do?
No, you have another option … you can sell, cop the loss, move on, and focus on the future.
Truth is you bought the financial equivalent of a Beanie Baby when everyone was losing their … beans. As a result, you’ve anchored yourself to a price that may not be seen for decades, even though the mining sector is picking up.
If you think you were given poor advice, or believe you were given a loan you shouldn’t have entered into, you can make a complaint to the Financial Ombudsman Service (FOS) — a lot of the mining town investments were sold by sleazy seminar spruikers — but it’s a slim chance.
Look, the only thing you can have some control over is your out-of-pocket costs — and the longer you hold onto this turkey, the more it’ll cost you. In all the years I’ve been doing this, I’ve never seen time turn a bad investment into a good one. Having said that, only you can make the decision on when it’s time to sell.