Australians have criticized a landlord after he complained he had to sell his investment property because rents could not keep up with high interest rates.
Owen Wells, 73, had been renting out the two-bedroom apartment in Melbourne’s CBD for almost two decades, but he said rising costs had led him to put the property on the market to help fund retirement of him and his wife Helen.
But there was very little sympathy for the boomer couple after social activist Jordan van den Lamb, who is the founder of Purple Pingers, shared the story.
The landlord realized that he could not get a tenant to pay off his ENTIRE mortgage and that he would have to pay part of it himself. Incredible stuff,” he wrote on X.
The sarcasm flowed thick and fast, with one commenter writing: ‘Poor guy. Imagine having to pay for a house you buy. Nightmare fuel.”
Another said: ‘Oh, poor dear. What a deep trauma. Thoughts and prayers.”
Others question the economics and basic math of Wells’ investment strategy.
“He bought the property 20 years ago,” one person wrote.
The number of social media users has soared amid the conviction of a landlord who said he was forced to sell his investment property because of high interest rates. Stock image
‘How much did he buy it for if his repayments are that high twenty years later? Has he not paid off any of his debts in the last twenty years?’
Mr Wells said his mortgage payments rose from $2,900 to $4,200 a month earlier this year.
He said when he bought the property 20 years ago, interest rates were reasonable and he had received good capital growth and rental income.
But with the land tax, strata fees and much higher interest rates in place, the rent they charged no longer covered the costs of running the apartment.
“My cash flow, just from my interest (repayments), goes from $35,000 a year to over $50,000… so if I’m getting $36,000 a year in rental income, I’m just behind the eight ball,” he says. told The era.
He said he also had to pay fees and costs for legal entities and brokers, “so I have negative cash flow.”
The cash interest rate is currently at a twelve-year high of 4.35 percent.
CoreLogic research director Tim Lawless said the higher costs are deterring real estate investors in the state.
“A lot of people point to the high tax environment in Victoria as a barrier to investment, which I think is the case,” he said.
‘You also have the rental reforms, which increase costs in terms of rent [rental properties to] standard, and you also have higher mortgage repayment costs, and some of that has been offset by fairly strong rental growth, but that hasn’t been enough.”
Social media users have criticized Mr Wells, claiming he should have done more research.
“Imagine buying an investment property without understanding how interest rates work,” one person wrote.
“Especially in Melbourne, which has the lowest rental yield in the country.”
“Real estate investors should be required to obtain certification in the fundamentals of investment risk,” says another.
“No other company could get away with it… if they don’t manage their financial risks.”
Others wondered why Mr. Wells told only part of his story.
“I notice he is quick to provide details of costs but not so keen on providing the capital gain on the sale of this investment property he had for 20 years,” one person wrote.
“We are expected to accept that wealthy people, the profit-seeking class, have somehow achieved their success through merit,” said another.
A third wrote: ‘Do people do research before they buy?’