Wow, what an amazing set of replies! Thank to everyone for ther insights, my wife and I read each one with interest.
To address some of the questions raised...
- We had 13 IPS when we moved back
- We sold 6 soon after return
- One became our PPOR
- So we now have 7 properties, 6 of which are IPs.
- The current MV on the 7 is about $4.5m as mentioned.
I hadn't worded it clearly whether we had 13 before or after the sales and I hadn't thought to clarified the PPOR. Sorry about that. Though that reads much less than 13 IPs now, I still like to think we've made some good decisions.
Interestingly, I don't regret the sale of the out-of-state IPs at all. They weren't performing and we did get some capital gain and they didn't lose too much in the time we held them.
@Aaron C: Rental income does cover debt but other costs make it negatively geared overall. Portfolio costs like rates $15k, mgt fees $6k, insurance $4k, strata $5k, repairs $15k (granted, not every year as repairs like that). Looking at last year, the gross rental income was approx 3.5% of theoretical market value.
@JacM wrote:
However a big caution is to remember why you started investing in the first place
This is a great point. The answer is that we didn't have confidence that superannuation would let us retire early (or possibly at all, in any comfort), and we wanted to have a financial safety net so we wouldn't be critically dependent on having jobs. (Side note: I have an embarrasing amount in superannuation after nearly 2 decades of employment: about $14k.)
@ThatBum wrote:
You have 3 million in net assets but not significantly cashflow positive? What was your original exit strategy?
My own strategy calls for around $2 million net assets at 5% net yield to retire.
Also a great point and I had to dig through old notes to find "6m with max 30% LVR and yielding 5% after all costs on market value".
Looking at that now, the amount is a bit excessive for minimal retirement, LVR is fine and I have no idea if 5% on MV is reasonable. I read of higher yields but I've never experienced it. Important note: I mean a net yield, "money in the bank", after all costs not just debt.
@Dazz wrote:
Like one of those old Saturn V rockets that used to launch astronauts into space, perhaps your first stage booster rockets, whilst getting you to this height, aren't giving you the boost you require any more.
You've grown to the point it's time to jettison that first stage, and fire up the second stage booster rockets.....don't be scared or fearful.....embrace the exhilaration of having made it to that level.
I really liked this analogy
I've long been interested in commercial property, but never taken the time to research it realistically. Could be this is the time. Thanks for those links.
@Terry_w and @AlexLee: lots of good points there.
You're right to be more objective and to separate the issues. I thought over the weekend that "if the tenants were great, would we be thinking of selling?". We wouldn't sell in that case, so PMs could certainly be part of the answer.
In summary, my action plan so far:
- Sell the one or two lowest performing properties, though only after some more research and forecasts on how they might do over 10-20 years.
- Consider PMs on difficult properties.
- Refocus and remember what our original goals were.
Thanks everyone for such supportive and insightful answers.
Ellers
