Best Time To Sell Otp

[NIF]

Hi All

I was wondering what people's thoughts were on when, in general, is the best time to sell an off the plan unit (if at all).

Please ignore the current situation where there is a possibility of an upcoming over supply of units.

Lets assume we are in a slow growth phase, & a unit was purchased say 18 months ago, & will be completed soon. The unit could be sold for a decent profit, say 15% more than the purchase price.

I was thinking that rather than complete & hold, it may be better to sell & take a profit. Then with the money that would have gone into the new unit, buy an old unit (or house), which theoretically should achieve better growth.

The reasoning being that growth on new units is slow for the first few years because of the newness factor. Much like a new car losing a lot of value after its driven out of the showroom.

So the best time to sell an OTP is when it is just completed, give or take a couple of months ?

Any views on this ?

 

[x102]

Even in Sydney some parts of town will do well in the 'oversupply' situation. The higest risk areas are places like Zetland, Alexandria etc... where the quality of the apartments is all similar (and fairly minimal) and there really are an aweful lot of them.

You're certainly right about new units dropping value like a car out of a showroom, but the increase that comes along later isn't so much because the apartment itself becomes more desirable, but because the land value increases.

Given this it might be a good idea to get into a different property market which is less competative. Once nice thing about units though, is you can hold more of them, which can save pain cashflow wise with vacancies.

There's certainly not as much scope for cosmetic makeovers with units IMHO, which is another good reason to work in different parts of the market.

 

[WillG]

Hi NIF,

If you are assuming slow growth for the unit I would do some calculations to see where the money from selling the unit could be put to better use.

It may work harder if you buy an older house as you have suggested.
It may work harder if you drop it into an offset account against your PPOR

Warren Buffet tends to look at shares with 'future growth' in mind. In you are into investing for the long term it may pay to consider getting a property with some land content.