1million in Equity!

[lizzie]

Has anyone sat down and worked out whther its better to take a profit now and again on a property and to use those profits as a springboard to acquire additional properties.

hi redwing

we're doing this at the moment. we have a property that has no foreseeable growth with no room to increase the growth above the suburb medium (ie, no room for improvement). and even then it is a suburb that is rather average as well. we have made significant growth on the property thru subdivision in the past, but it has now outgrown it's usefulness.

the bank has the property valued at $220k, so maximum borrowing is $185k. market value of the property is around $250k. we have it currently on the market for $260k and have had plenty of interest (and two offers).

by selling it means we can take the extra $70k, buy a block of land with a rentable house on it, in a better suburb, that is zoned for 3x3bed townhouses.

if we are successful in purchasing we intend to build these townhouses in another two years after a few other developments are completed - the capital growth in the new area would be worth substantially more than the small single house, even without the development ... but the development would exponentially increase our net equity.

so yes, it is very worthwhile cashing in occasionally if you are going to use the money to fastrack your investing.

 

[sue78]

Hi SeeChange

What thread was this in?

Has anyone sat down and worked out whther its better to take a profit now and again on a property and to use those profits as a springboard to acquire additional properties.

Yes, not just to finance more purchases but also just to have money to spend again and enjoy life. I don't see the point of being asset rich and cash poor all the time. It may take a bit longer to reach our goals but I prefer to buy 3 sell 1 and so on.

 

[Simone]

Kenneth spoke of 'zero deposit' when purchasing IP, this is what we did for our last couple of IP's they did not cost us a cent (so to speak!)

 

[alexlee]

Kenneth spoke of 'zero deposit' when purchasing IP, this is what we did for our last couple of IP's they did not cost us a cent (so to speak!)

Surely that's common practice. You simply refinance your existing properties to get say 25% of the cost of the new property, then get 80% LVR on the new IP. The thing you have to keep an eye on is the total LVR of your portfolio.

I bought my last 2 IPs with zero deposits (by refinancing) but my overall LVR on the properties (excluding cash and shares) is around 65% so I'm comfortable with it.
Alex

 

[lizzie]

we've done several with 0% deposit by using a loc on another property ... but, as with my example above, sometimes it's just worth cashing the proprety in and using the money in a more profitable manner. banks will often only value on "fire sale" value rather than what a property is actually worth. our ppor is in a similar situation - bank has valued at $650k (and will lend at 80% for ip loc) but is worth around high $700's according to the current market...

yes i will have to pay cg tax and agents commissions on the ip sale, but as i have no other income then the tax is no great deal. the property is in an area that any work we do on the property (ie, extensions) will only increase the property by the value of the work, so there is not much point in doing so. it is also only an average suburb so growth is limited to average.

so in the long term we are better off releasing the extra $70k above what the bank will lend on the property and fast tracking a better project.

 

[see_change]

Redwing

http://www.somersoft.com/forums/showthread.php?p=228370#post228370

See Change

 

[asdf]

Selling now would mean I give up 23.25% of my profits. Plus I get to take cash up front by reducing tax even more through depreciations. Exercise obviously becomes less effective for lower tax rates but hopefully when its time to give up this J.O.B, I can pick and choose which to sell and pay little to no tax while keeping my IP in the game for potentially more profits. Banks are throwing money away, difficulty in obtaining finance should not be the main reason to sell up.

 

[NigelW]

C'mon Seech

You didn't actually prove that in the thread did you?

I seem to recall a lack of engagement on the numbers after my post.

Funny thing is, in the circumstances you described I don't disagree with the approach you've taken, but as a general principle I think selling is inefficient.

Cheers
N.

 

[see_change]

C'mon Seech

You didn't actually prove that in the thread did you?

I seem to recall a lack of engagement on the numbers after my post.

Funny thing is, in the circumstances you described I don't disagree with the approach you've taken, but as a general principle I think selling is inefficient.

Cheers
N.

I rest my case.

I didn't see the point in repeating myself. I wasn't aiming to prove the case in every situation , just the circumstances that I was outlining which are my cicumstances .

Proving in one situation , is enough to show that your blanket statement against it is inacurate.

Surely you've learnt over the last few years that people around here arn't interested in " general principles ". Those apply to other people. I'm always interested in doing things better...

See Change

 

[WBG Redcliffe]

Grossreal

Your spot on the money.

WBG

 

[willair]

I know this is an old post,but just have to ask the question is the equity in your investments still growing over the past 11 months, we have not bought property in over three year now,but we still hold i-ps and invest in other area's but with the property vaules in Brisbane the way they are going look like the next 11 months will be the same.. ..willair..

 

[Rixter]

Yes, our property portfolio is growing all the time. Put another Brisbane property under contract back in August which settles next month. Have already had some nice growth in that short time

 

[Petal]

I know this is an old post

Oh that explains it. I was reading through this post and thought Peter Spann was joining us again on the forum

I have just updated our net worth and it has finally jumped over the 1mil which I am very happy about.

We are still buying in Brisbane and hopefully we are still on the right track.

 

[letiha]

We will make at least $500k in equity one year with our current projects.

 

[Kennethkohsg]

Surely that's common practice. You simply refinance your existing properties to get say 25% of the cost of the new property, then get 80% LVR on the new IP. The thing you have to keep an eye on is the total LVR of your portfolio.

I bought my last 2 IPs with zero deposits (by refinancing) but my overall LVR on the properties (excluding cash and shares) is around 65% so I'm comfortable with it.
Alex

&&&&&&&&&&&&&&&&&&&&&&&&
Dear Alex,

1. Have you personally tried proceeding further with OPM/OPT/OPR concept, such as iike doing JVs and trying to raise investors'/public funds for your own property investments and other property development projects etc, using the "Zero Deposit Downpayment" concept?

2. If so, can you please share with us your own experiences and normal pitfalls encountered when adopting this kind of wealth creation and property investing strategies, please.

3. Perhaps, the more experienced and more successful members like Peter Spann, Michael Yardney, who have personally done this for themselves, can further enligthen us, regarding their own experiences too.

4. Looking forward to learning from the truly "hand-on" /more experienced members for my own self-education, please.

5. Thank you.

Cheers,
Kenneth KOH

 

[Kennethkohsg]

Probably not the right time in the market for it but definately possible.

*******************
Dear Peter,

1. When would be the "right" market time?/timing? to do the property developments in the Australian property market in this case, then?

2. Looking forward to learning from your well-informed and learned views, please.

3. Thank you.

Cheers,
Kenneth KOH

 

[Kennethkohsg]

Dear All,

1. From my recent listening to Anthony Robbin's tapes and reading the book, "How to Get RICH" by Felix Dennis, the late oil billionaire, John Paul Getty was once quoted as having said, " If you can actually count your money, you are NOT really RICH".

2. Both Anthony Robbins and Felix Dennis, whose present nett worth are reportedly said to be worth more than US$300 millions each in today's context, seem to be saying the same thing too.

3. I also find it interesting that both these 2 highly successful and "hand-on" entrepreneurs and self-made multi-millioniares, like Anthony Robbins and Felix Dennis, have specially qualified their esteemed views further by making the statement, "Becoming RICH, does not guarantee HAPPINESS".

4. Consequently, I believe that, beside measuring ourselves in the usual "$$" material sense, we can all be "RICH" in different ways according to our own life goals and aspirations, as long as we are presently and truly LOVE, doing the things that we have always wanted to do in our own life, on a daily basis.


Cheers,
Kenneth KOH

 

[Andrew_A]

Ken, thought you might appreciate this slice of wisdom I collected from the AFR today from an article about philanthropist Chuck Feeney.

"There is no wealth but life. Life, including all it's power of love, of joy, and of admiration. That country is richest which nourishes the greater number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personally and by means of his own possessions, over the live of others." John Ruskin.

 

[WinstonWolfe]

"There is no wealth but life. Life, including all it's power of love, of joy, and of admiration. That country is richest which nourishes the greater number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personally and by means of his own possessions, over the live of others, AND HAS THE CAPACITY TO DEFEND THOSE RICHES FROM THOSE WHO WOULD TAKE THEM" John Ruskin.

......................

 

[MTR]

I know this is an old post,but just have to ask the question is the equity in your investments still growing over the past 11 months, we have not bought property in over three year now,but we still hold i-ps and invest in other area's but with the property vaules in Brisbane the way they are going look like the next 11 months will be the same.. ..willair..

Hi Willair, I did well in WA market when it was booming, I then jumped into the Melb inner city and have made 15%+ in last 3 months, I am now jumping into shares and using equity from WA IPs to keep it growing.

Why are you not making money in Brissy property market, from reports I have read it is a rising market??

Cheers, MTR