Never sell IP (keep accumulating) vs sell for profit
- Thread starter datto
- Start date
Which banks are that? I seriously doubt that. Lending has been cut back quite a bit. there are a few major developers of apartments in melbourne where finance has dried up and now buyers are waiting out the sunset clause of 5 years + for their deposit.
Last year - From personal experience i couldn't get a loan as i was categorized as closing my loan too quickly. i had equity, cashflow, stable job of 5 years with annual income over 6 figures and only 1 investment property. in the end i could take loan of 65% of the purchase price. I had this experience from 5 lenders so it is a bit of a suprise to me.
Lots of agents had sales when the buyers finance fell through. That includes one of my property which was put up for sale. I don't think you can get 500K loan without any proof of stable income. i would say it is most likely asian countries like china (which has highly inflated property prices) or malaysia for one which would have a subprime. china will bust first before australia. Apartments over there in Malaysia are like more expensive that the ones in australia and their income is less than what someone who earns here and 1/3 of the currency too.
Quite obviously, how could you meet the minimum repayments if you dont have enough money coming in ?
I think Alex was alluding to a deeper issue.
Where, even though the rent is postive and enough to cover the loan you want, you still might not get it cause you the bank will not lend it to you because you are not working but reliant solely or "too much" on your investment income.
Of course, I don't know this from personal experience, my portfolio has always been so negative it's a joke, just my interpretation of what's been discussed here on the forum on this topic. I do hope I've understood correctly.
(PS: edited of typographical errors etc especially for your enjoyment bayview, hopefully it meets you high english literacy standards)
We sold one that we living in whilst our home was being built and thank god we did.
It was the only strata property that we have ever owned brought at a great price new but as with many new buildings, the builder placed their own strata agents and left the building to slowly rot.
We got out just before the realisation that the sinking fund was no where near enough to cover items that should have been warranty jobs.
Even better, whilst we leased it back for 3 months the dishwasher, oven and drier all needed changing and the balcony tiles started to lift.
Ha, the buyer thought he negotiated well.
It was the only strata property that we have ever owned brought at a great price new but as with many new buildings, the builder placed their own strata agents and left the building to slowly rot.
We got out just before the realisation that the sinking fund was no where near enough to cover items that should have been warranty jobs.
Even better, whilst we leased it back for 3 months the dishwasher, oven and drier all needed changing and the balcony tiles started to lift.
Ha, the buyer thought he negotiated well.
Thanks datto . Some of the money some people seem to do make mine seem like beer money but I agree , 50-8o-7o whatever, it is still nothing to sneeze at is it.
Cheers
As said, I'm not sure. Have been told something similar by two people on separate occassions. They've been reluctant to tell when I ask them. That said if you think about it it's pretty easy to forge a lot of things. Obviously I'm not saying anyone should do it, just saying it's possible.
It may have also been some time ago, in the last 6 months a lot of places have been really tightening up. Biggest tightening happened 1st Jan this year.
As with everything in life there has to be balance, you can’t lean too far one way or the other because then you become an extremist and people will not talk to you at dinner parties.
It’s fine to sell IPs if you re-invest the profits, example my parents sold 2 units to buy 1 house, if they didn’t sell those units there’s no way they would have enough cash to get the loan to buy the house.
So I guess do whatever you think is the right strategy in your current situation... that sounded better in my head...
PS. I’m interested in this recent credit tightening, any article links?
It’s fine to sell IPs if you re-invest the profits, example my parents sold 2 units to buy 1 house, if they didn’t sell those units there’s no way they would have enough cash to get the loan to buy the house.
So I guess do whatever you think is the right strategy in your current situation... that sounded better in my head...
PS. I’m interested in this recent credit tightening, any article links?
But Zed, did your parents make more money ie are they better off now that they sold the 2 units to buy the house?
In my situation, I think my gross IP value would have doubled IF I never sold any IP. But on the flip side I would have less cash in bank.
Now with the property marketing appearing to stall and prices MAY go in reverse I may find it an opportune time to buy another IP (so long as the banks are willing).
If the banks dont want to play then I can use the cash for the stock market (SM). The SM appears to be on the up, but sometimes I feel a hard core property investor should stick to property (what we know best).
In my situation, I think my gross IP value would have doubled IF I never sold any IP. But on the flip side I would have less cash in bank.
Now with the property marketing appearing to stall and prices MAY go in reverse I may find it an opportune time to buy another IP (so long as the banks are willing).
If the banks dont want to play then I can use the cash for the stock market (SM). The SM appears to be on the up, but sometimes I feel a hard core property investor should stick to property (what we know best).
if someone offered an amount say other properties were selling around 400k+ and someone offered high 500K would you take it?.
I did - sold and bought another place for 400K last year. i'm not saying you should sell however If you never sell you never really realize any capital gain. Of course the multiplying effect comes into play however sometimes it does not necessarily. i remember a home and land package. Stalls on building and heavry rain only added to the overall cost. after 2 years - after minusing all the capital costs with the loan and building - i barely made 20K. where else my unit which i held and renovated and sold made over 100K in less than 1 year. Every situation is different to another.
I did - sold and bought another place for 400K last year. i'm not saying you should sell however If you never sell you never really realize any capital gain. Of course the multiplying effect comes into play however sometimes it does not necessarily. i remember a home and land package. Stalls on building and heavry rain only added to the overall cost. after 2 years - after minusing all the capital costs with the loan and building - i barely made 20K. where else my unit which i held and renovated and sold made over 100K in less than 1 year. Every situation is different to another.
Personally I rarely sell, some of the properties I have owned for years cover the short fall on the more recent purchases. My idea is to eventually live of the excess rental income.
Personally I rarely sell, some of the properties I have owned for years cover the short fall on the more recent purchases. My idea is to eventually live of the excess rental income.
Never sell.
Beebop, that is exactly what people in the past have told me.
When I have sold, they used to shake their heads and say "why did you sell?", "never sell".
I guess these people are what I call hard core property investors. Hell bent on accumulating IP and building up their wealth in property and hardly anything else. Even the odd purchases of shares from initial public offers are never sold!
Hoarders of capital they are!
When I have sold, they used to shake their heads and say "why did you sell?", "never sell".
I guess these people are what I call hard core property investors. Hell bent on accumulating IP and building up their wealth in property and hardly anything else. Even the odd purchases of shares from initial public offers are never sold!
Hoarders of capital they are!
Never sell and ride the crash
I think they are better off... haven’t done the exact math, but the house is in south yarra with a possibility to build a second storey on it, so long term I think it was a good move. Also they downsized their portfolio as they look after the properties themselves it’s easier for them to find tenants for one house rather then 2 units. My example was to illustrate that selling IPs to reinvest profits is fine... but I guess selling IPs to buy a new carerra turbo is also ‘fine’ but I think you guys know what I’m on about.
Also selling the 2 IPs gave them a cash buffer (its going to come in handy over the next 2 years I think). Datto, you said it perfectly with this ‘In my situation, I think my gross IP value would have doubled IF I never sold any IP. But on the flip side I would have less cash in bank.’ Some SANF is also good for investors. Don’t dwell on the past and look to the future.
Happy Days
...wish it was the same around here
What if the LVR as a % was the same though
As long as your smart with the funds realised from the sale of the asset
No such thing as a sure thing, as in life always cover your R's
Spot on
That's not a very big timeframe
Exactly, line your ducks up before you shoot them
"As long as your smart with the funds realised from the sale of the asset"
Yes, exactly right. If you blow the money on consumables, then its gone! All those fancy nick nacks are tempting but you never get your money back on them.
Better off re-investing the money, that way you have a good chance of making more money. And only allow a small % of your money on certain occasions to spent on luxuries. Thats my view.
"That's not a very big timeframe "
Hey, thats forty years!
Yes, exactly right. If you blow the money on consumables, then its gone! All those fancy nick nacks are tempting but you never get your money back on them.
Better off re-investing the money, that way you have a good chance of making more money. And only allow a small % of your money on certain occasions to spent on luxuries. Thats my view.
"That's not a very big timeframe "
Hey, thats forty years!
Based on the huge portfolio. Do you think interest only or principle + interest would be the way to go for IPs?
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