The scene: The elegant drawing room of Castello Quiggles, replete with stacks of parchment scrawled with figures, arrows, numbers and question marks. The Bold Adventurer confronts the Empress of O'Connor and points out in a remarkably reasonable and balanced way that to sell the property will raise as much debt free cash as a refinance would raise debt laden cash, and that the investment returns available would ensure that they could live without the need to subjugate the household's time to external employers ever again. Satisfied at the inassailable case he has made, he awaits the response.
She imperiously (what else from an empress?) notes that she likes the present asset, that it is comfortable, secure and cashflow positive, in addition to having appreciated quickly. Although the Adventurer is correct as far as he goes, even an assumed annual 5% cap growth would tilt the odds in the favour of retention.
The Adventurer is, of course prepared. With a lightning riposte he shows that while an average 5% cap rate does indeed show this, in fact cap growth is slowing - better to take the funds elsewhere while cap growth remains slow and rejoin the party later when yields are higher and property less popular.
He has underestimated his adversary. She points out that he has glossed over the fairly easy value adding options for the property which will lower costs and improve values and possible rental returns. She repeats, she LIKES the property and like the bank, views it as secure.
Warily, and more respectfully, he comes at the dilemma from a new angle. He repeats all her arguments, affirming that he has heard and understood them. Then he attempts to make his case again, noting some minor flaws in her case that leave the two investment options largely balanced. It comes down to a risk/reward ratio question - how solid is the alternative investment option.
Eventually a compromise is agreed - he has three months to show continuous, high level profits. Once he can do that, she will acquiesce. A chaste kiss, expressions of profound and mutual admiration, and he sprints off to his alternative employment.
Does anyone else have days like this?
She imperiously (what else from an empress?) notes that she likes the present asset, that it is comfortable, secure and cashflow positive, in addition to having appreciated quickly. Although the Adventurer is correct as far as he goes, even an assumed annual 5% cap growth would tilt the odds in the favour of retention.
The Adventurer is, of course prepared. With a lightning riposte he shows that while an average 5% cap rate does indeed show this, in fact cap growth is slowing - better to take the funds elsewhere while cap growth remains slow and rejoin the party later when yields are higher and property less popular.
He has underestimated his adversary. She points out that he has glossed over the fairly easy value adding options for the property which will lower costs and improve values and possible rental returns. She repeats, she LIKES the property and like the bank, views it as secure.
Warily, and more respectfully, he comes at the dilemma from a new angle. He repeats all her arguments, affirming that he has heard and understood them. Then he attempts to make his case again, noting some minor flaws in her case that leave the two investment options largely balanced. It comes down to a risk/reward ratio question - how solid is the alternative investment option.
Eventually a compromise is agreed - he has three months to show continuous, high level profits. Once he can do that, she will acquiesce. A chaste kiss, expressions of profound and mutual admiration, and he sprints off to his alternative employment.
Does anyone else have days like this?