should i hold or sell with loss??
- Thread starter tigerGT
- Start date
Dear GeorgeSA,
1. I am much encouraged by your present response and I am inwardly happy for you. I hope to see you emerge as one of the highly successful multi-millionaires property investors in due course.
2. I feel much "flattered" and "humbled" by your comments, though;- like you, I must confess here that I still have a lot to learn from other members too, especially from the more highly experienced investors like Aceducey, Karina, Kristine, Michael Yardney, Rolf, Dale, Peter Spann, Steve Navra, Sim etc.
3. Please do not forget the other forum members' contributions too, as you quietly reflect and edcuate yourself into your own future success.
God Bless,
Kenneth KOH
1. I am much encouraged by your present response and I am inwardly happy for you. I hope to see you emerge as one of the highly successful multi-millionaires property investors in due course.
2. I feel much "flattered" and "humbled" by your comments, though;- like you, I must confess here that I still have a lot to learn from other members too, especially from the more highly experienced investors like Aceducey, Karina, Kristine, Michael Yardney, Rolf, Dale, Peter Spann, Steve Navra, Sim etc.
3. Please do not forget the other forum members' contributions too, as you quietly reflect and edcuate yourself into your own future success.
God Bless,
Kenneth KOH
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Hi all,
Kennethkohsg,
I don't understand what you are trying to say here....
" While I do enjoy your "sparrings" and exchange of views with the various forum members to a certain extent, nonetheless, I feel that I need to say this: Say what you like, a cogent and well argument does not create (material) wealth for any one of us... A well presented/argued viewpoint does not neccessarily means that the outcome will turn out exactly what we think or will want to think it out to be. Remember the saying, " the only thing that we can be certain about this world is change (or/and its uncertainities)".
Don't get me wrong, I'm not anti-property, nor am I necessarily anti this property of Georges, but I am against this property at this price.
I like to look at the economics of any investment, and that includes the assumptions most make about an investment.
We owned a similar type of property in Melbourne in the 80's and sold at the peak of the boom in 1990 (that was more good luck than management, though when we sold it did not make sense to keep it). We used the money for other purposes.
We have, and are holding IPs that have had good cap growth and are cashflow positive. I don't expect them to go up in value given the current inflation levels/market conditions, but because they still give a 5% gross yield (on current valuations) they probably will not drop in value by enough(given current inflation and interest rates) to justify selling now and repurchasing later.
I also wish Georges the best, but he must make up his own investment strategy that suits himself (and the new wife). If he has a chain around his neck from a poor decision from the past, then the clearly defined strategy will be harder to work out.
Kenneth, Do you think this property is a proposition to hold and hope that there are changes in market conditions that will turn it around?? What would you expect the time frame to be?? Why??
Would you continue to hold this property or cut your losses and look for further opportunity??
bye
Kennethkohsg,
I don't understand what you are trying to say here....
" While I do enjoy your "sparrings" and exchange of views with the various forum members to a certain extent, nonetheless, I feel that I need to say this: Say what you like, a cogent and well argument does not create (material) wealth for any one of us... A well presented/argued viewpoint does not neccessarily means that the outcome will turn out exactly what we think or will want to think it out to be. Remember the saying, " the only thing that we can be certain about this world is change (or/and its uncertainities)".
Don't get me wrong, I'm not anti-property, nor am I necessarily anti this property of Georges, but I am against this property at this price.
I like to look at the economics of any investment, and that includes the assumptions most make about an investment.
We owned a similar type of property in Melbourne in the 80's and sold at the peak of the boom in 1990 (that was more good luck than management, though when we sold it did not make sense to keep it). We used the money for other purposes.
We have, and are holding IPs that have had good cap growth and are cashflow positive. I don't expect them to go up in value given the current inflation levels/market conditions, but because they still give a 5% gross yield (on current valuations) they probably will not drop in value by enough(given current inflation and interest rates) to justify selling now and repurchasing later.
I also wish Georges the best, but he must make up his own investment strategy that suits himself (and the new wife). If he has a chain around his neck from a poor decision from the past, then the clearly defined strategy will be harder to work out.
Kenneth, Do you think this property is a proposition to hold and hope that there are changes in market conditions that will turn it around?? What would you expect the time frame to be?? Why??
Would you continue to hold this property or cut your losses and look for further opportunity??
bye
**************************************************Bill.L said:
Dear Bill,
1. I find you to be intellectually challenging and cogent in presenting your viuewpoints. They sound so convincing that I want to agree with your views;- however I have to remind myself constantly that the only thing we can be certain in life is change (and its uncertainities about its future)".
2. I respect you for your moral courage and integrity and your strong convictions about your own beliefs. You never falter even though you were under attacked by many members including the highly experienced ones, for your predictions about the glooming property market situation last year.
3. To me, whether GeorgeSA eventually decides to sell at a loss or continue to hold on his property, is not as important as what has he really learnt from his situation and how he is going to live with his decision and eventually emerge victoriously and able to congratulate himself for making the particular decision today, irrespective of the option that he has taken.The important issue is GeorgeSa has to learn to decide for himself and able to live by the consequences of his decision makeing and then proceed to move on in his life despite his present temporary setback in life. In this respect, I think that GeorgeSA has already won the battle against himself, decisively well.
4. Thus, I also know that GeorgeSA has invested and generated much wealth and wisdom for himself thorough this forum discussion and I thinks he has already knew it for himself. It has been one big learning curve for him, irrespective of the decision tha the is going to make for himself.
5. Likewise, I am comfortable and happy with what you are sharing here and the investing strategies which you are presently using. Apparently, it seems to be working well in your case and consequently I can understand why you feel strongly and firmly about your own self-belief. I must congratulate you for this too.
6. However, we need also to be mindful that what actually works in your case, may not work in my case simply because of the differences in our investing circumstances and investing styles and our own personalities.
7. To me, there is no one simple way to fit all investors with their unique personalities and different investing circumstances/capacities and of different life experiences. To each, its own.
8. Consequently, each of us will have to seek out that unique success formula for ourselves which will enable us to realise all our life goals and create wealth for ourselves. Each one of us will define wealth differently but we have to all learn to be happy with our own definition and be able to live by it and enjoy its thoroughly.
9. You says, " I also wish Georges the best, but he must make up his own investment strategy that suits himself (and the new wife).". I fully agree with you.
10. You also says, " If he (GeorgeSA) has a chain around his neck from a poor decision from the past, then the clearly defined strategy will be harder to work out indeed.". Though I can agree with your thinking, I will also say this to you, " Please leave it to GeorgeSA to sort himself out. If GeorgeSA needs a stronger neck to survive his setback in life, if he is determined, he will train himself to have one. We do not have to worry for him. If GeorgeSA is wiser and able to think through clearly his own success formula, he will do so in his own way and get to succeed in realising his life goals as long as he is determined and burning strongly within himself enough that he want all his life goals to be realised".
11. So, it does not really matter what you think or I think. The call belongs to GeorgeSA and it is GeorgeSA who have to really think and decide what is actually best for himself in the prevailing situation. As long as he is able to decide for himself, and able to live by the consequence of his decision and able to move on in life, who really cares which options he takes ultimately.
Ultimately, it is his monies. If GeorgeSA really wants to throw it away ( and does not listen to any one of us) , what can you and I do, beside trying to understand him from his perspective and accept him as he is and yet to be able to remian true to our own honouranble intentions and continue to encourage him to succeed in his own life.
12. I trust I have managed to fully and clearly communicate my own thinking to you through this post.
13. Thank you.
God Bless
Kenneth KOH
*************************************************Bill.L said:
Dear Bill,
1. Who knows for certain what will happens tommorrow, beside God Himself?
2. So how would I know what is best for GeorgeSA or for anyone else for that matter?... I only know what is best for myself when my time comes by the grace of God
3. To cut loss or to hold? Each one of us have to decide for ourselves when we are really caught in this very situation. There is no one simple that fit all answer..
4. .. In my case, I am likely to hold if I am actually being caught in GeorgeSA's situation at this point in time. I have done this before if you have read my sharing in the other post.
5. Like you, I am unlikely to change my position once I have made up my mind despite what the others have said otherwise.
6. I do not really care what you think of me or of my decision once I have made up my mind (and have God's blessing in the form of an inner self-peace and intuitively feeling that I am doing the right things, following God's Will.) It as simple as that. If your thinking happens to co-incide with mine, well and good and I have another supporter in spirit;- if your thinking turns out to disagree with mine, it's fine with me too;- after all it is my call and not your call for you to insist that I must follow your feedback and advice.
7. For your kind update,please.
8. Thank you.
regards,
Kenneth KOH
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GeorgesA said:
Georges,
Find me a monkey who made money on the property market during the period you specify and I'll allow you the point.
I really think you don't fully grasp the value of knowledge in investing.
Certainly many people saw their property increase in value between 2000 and 2003 - note this is a more accurate period for which property boomed nationally, NOT the period you specified.
But how many leveraged this to make significant profits?
Only the ones with the knowledge.
Knowledge helps you move into the market faster, select appropriate investments and magnify your returns.
If wealth is the rock and property is the plank, knowledge is the lever.
Cheers,
Aceyducey
Hi all,
Kenneth, if I have upset you in some way I am very sorry, that has not been my intention.
All I have been trying to do in this thread is answer the queries that Georges made at the very beginning......
"I would love some advice on where to go from here.. it has been on the market for 1 year now.
'''should i do some more renovations ( eg.. drievway and landscaping) and try to resell
''''should i sell it even if i am left with a 10-15k mortgage?? and buy something else...
should i hold onto it????
Any insight would be great... Thanks"
and tried to give my reasons.
bye
Kenneth, if I have upset you in some way I am very sorry, that has not been my intention.
All I have been trying to do in this thread is answer the queries that Georges made at the very beginning......
"I would love some advice on where to go from here.. it has been on the market for 1 year now.
'''should i do some more renovations ( eg.. drievway and landscaping) and try to resell
''''should i sell it even if i am left with a 10-15k mortgage?? and buy something else...
should i hold onto it????
Any insight would be great... Thanks"
and tried to give my reasons.
bye
Mark,
The point is contained in the rest of my previous post.
Simply buying an investment property won't make you financially independent. And booms don't last forever, you have to be able to preserve and grow your wealth through other times as well.
It's buying correctly and leveraging yourself into further purchases using the equity, adapting your strategy to the conditions and keeping your personal goals in mind that makes a lasting difference to personal lifestyle.
That's where having knowledge comes in.
Can any 'monkey' simply buy a property and make profits during a boom - clearly not. Because they didn't.
Cheers,
Aceyducey
The point is contained in the rest of my previous post.
Simply buying an investment property won't make you financially independent. And booms don't last forever, you have to be able to preserve and grow your wealth through other times as well.
It's buying correctly and leveraging yourself into further purchases using the equity, adapting your strategy to the conditions and keeping your personal goals in mind that makes a lasting difference to personal lifestyle.
That's where having knowledge comes in.
Can any 'monkey' simply buy a property and make profits during a boom - clearly not. Because they didn't.
Cheers,
Aceyducey
I thought that one of the biggest advantages of residential property investment was that it did not require specialised knowledge or expertise but merely common sense.
This form of investment is simply an exersise of capital appreciation through mortgage gearing. And if one can earn enough income to cover all the contingencies a landlord has to put up with then it can be a worthwhile investment.
Booms come and go but one has to sit quietly and let inflation do its work.
This form of investment is simply an exersise of capital appreciation through mortgage gearing. And if one can earn enough income to cover all the contingencies a landlord has to put up with then it can be a worthwhile investment.
Booms come and go but one has to sit quietly and let inflation do its work.
Mark,
The collective wisdom of this and other property forum says otherwise.
Spend some time reading back over the history of this forum.
You'll learn that while common sense (a rare commodity itself) is a basic requirement, if you want to be successful as an investor in achieving financial freedom you need to learn about structuring, strategies for financing, leverage, value-adding techniques and how to effectively exit property investments. Plus a body of broader knowledge around investment selection, negotiation, asset management and other topics which applies to a large extent across different asset classes.
Most people classified as property investors buy a single investment property. Historically almost half of them sell it at a loss or break-even (based on inflation). The other half make some money, but certainly do not achieve financial freedom.
And to correct some of the misapprehensions in your latest post, inflation is NOT your friend and you do not want it to do it's work. Inflation reduces the value of money over time. If you are not achieving a return better than the rate of inflation you are merely treading water.
Capital appreciation is the key - and this is achievable regardless of whether you leverage through mortgages.
Mortgages are a tool for maximising capital appreciation. The actual appreciation on good property occurs regardless of who owns what percentage of the property.
Cheers,
Aceyducey
The collective wisdom of this and other property forum says otherwise.
Spend some time reading back over the history of this forum.
You'll learn that while common sense (a rare commodity itself) is a basic requirement, if you want to be successful as an investor in achieving financial freedom you need to learn about structuring, strategies for financing, leverage, value-adding techniques and how to effectively exit property investments. Plus a body of broader knowledge around investment selection, negotiation, asset management and other topics which applies to a large extent across different asset classes.
Most people classified as property investors buy a single investment property. Historically almost half of them sell it at a loss or break-even (based on inflation). The other half make some money, but certainly do not achieve financial freedom.
And to correct some of the misapprehensions in your latest post, inflation is NOT your friend and you do not want it to do it's work. Inflation reduces the value of money over time. If you are not achieving a return better than the rate of inflation you are merely treading water.
Capital appreciation is the key - and this is achievable regardless of whether you leverage through mortgages.
Mortgages are a tool for maximising capital appreciation. The actual appreciation on good property occurs regardless of who owns what percentage of the property.
Cheers,
Aceyducey
*************************************************markp said:
Dear MarkP,
1. I used to think so, previously. However, as I get more involved in the property investing game and self-educate myself further, I begin to realise that there a lot of things more that I do not really know not can I afford to take it for granted, if I am to minimise my investing risks and to increase my chances of succeeding in this property investing game.
2. Each investor, each property and each suburb has its own unique characteristics that made them the way they are now as it appears to us. Each of us will have our own opinions of how the specifc property and its location neighbouthood/suburb will perform in future and our known "whys", but whether it is exactly what really made the specific property/suburb ticks the way we think it will, nobody can tell for sure except the actual reality will naturally evolve itself out over time and whether we are prepared to the new reality to honestly review our previous assessments and to know where and when we were right and wrong about our own opinions of things, with the hindsight of wisdom.
3. Consequently, I also begin to realise that "commonsense" is not common nowsadays;- what is previously considered as so called "common knowledge" about the property investing game has, "suddenly" become uniquely distinct and increasing different as to become an specialised knowledge in/of itself, as far as successfuly property investing as concerned.
4. This is exactly because of our human nature. As fellow human beings, we are all very uniquely made and all have different thinkings about things in general in one way or the other despite we do also share a number of similarities and thinking areas too.
5. You probably have your reasons for thinking the way you think now and for simp;lify your views on this highly "complex" property investing games. I will "automatically" know that some other members who may agree with you while yet still others may not, due to our different level of investing knowledges and unique investing experiences.
6. For me, the more I learn, the more I realise that there are even more things that I do not really know or not fully realised about the Nature of Man and of our human society and their human behaivours, thus the more tentative, my views has become and all the more I need to further learn from the other members too.
7. Thus, in a certain way, while I know that I am increasing my property investing knowledge as the times goes by, the more I am humbled by their members' knowledge and skills as I begin to see their "genius" at work. I also begin to realise that they are also made in the same image of God as I was made to possess despite all our different uniqueness, strenghts and weaknesses. In the meantime, materially speaking, the level of wealth created through property investing by different investors begin to show out themselves, as the indirect measure between experienced and inexperienced property investors.
8. One thing that I am certain now is that GeorgeSA is no longer thinking the same way he has initially thought when he first invested in his property. He has learnt something from our discussion here.
9. GeorgeSA, do you agree with me here? Please confirm for us.
10. Thank you.
regards,
Kenneth KOH
Bill.L said:
*******************************************
Dear Bill,
1. You have not the least upsetted me at all, to date, in any way.
2. I know that you are merely sharing your views with GerogeSA in full honesty and saying things out the way as you actually see it and believe in, internally at this point in term. This is good for healthy forum discussion.
3. If anything, your own post shows out your full honesty and your moral courage as well as the uniqueness of each of our own property investing experiences.
4. As I have tell before, I personally find your views intellectually challenging. I find that I am not able to "challenge" your argument convincingly as they are quite logical and well argued yet intiuitively, I also know that I cannot translate your views fully in my own effective actions in my personal context, at this point in time, given our different unique investing personalities and investing circumstances.
5. As far as I am concerned, you are doing fine and well in your property investing game to date. Your posts merely shows out your internal honesty and strong personal beliefs about things in general.
6. Thank you for being honest and sharing your own unique views and experiences with us in this forum.
Cheers,
Kenneth KOH
I am certainly not thinking the same way as i did before the start of this discussion. For starters I feel like I have so many more options now, I am now using forecasting thanks to a very nice forum member who sent it to me in order to model certain future scenarios.
I know see my property as a steep part of my learning curve which i need to get over.. I mean there are so many things I have learnt from this forum. this is not to mention the books that should arrive on tuesday....
knowledge is good
experience better
Hi all,
Acey, you must be kidding with this statement, in regard to property investment........
"And to correct some of the misapprehensions in your latest post, inflation is NOT your friend and you do not want it to do it's work. Inflation reduces the value of money over time. If you are not achieving a return better than the rate of inflation you are merely treading water."
For a property investor who can hold a property, the leverage of the borrowed funds works in their favour. Let me explain with some numbers.
1 Buy a house (IP using all borrowed funds IO) for $44,000. Rent for $70 pw
2 Current income $14,000
3 10 years go by with inflation at 7.2% pa.
4 At end of 10 years house value $88,000, house rents for $140 pw and current income is $28,000
5 Everything is still relative.
6 But wait there's more!!!
7 You still only owe $44000 on the loan!!!!
8 Inflation has given you half of the house for nothing.
bye
Acey, you must be kidding with this statement, in regard to property investment........
"And to correct some of the misapprehensions in your latest post, inflation is NOT your friend and you do not want it to do it's work. Inflation reduces the value of money over time. If you are not achieving a return better than the rate of inflation you are merely treading water."
For a property investor who can hold a property, the leverage of the borrowed funds works in their favour. Let me explain with some numbers.
1 Buy a house (IP using all borrowed funds IO) for $44,000. Rent for $70 pw
2 Current income $14,000
3 10 years go by with inflation at 7.2% pa.
4 At end of 10 years house value $88,000, house rents for $140 pw and current income is $28,000
5 Everything is still relative.
6 But wait there's more!!!
7 You still only owe $44000 on the loan!!!!
8 Inflation has given you half of the house for nothing.
bye
Bill.L said:
Bill,
You've confused inflation with capital appreciation again.
Let's see, under your scenario inflation is 7.2%. There has been no capital appreciation on the property at all.
At 10 years of 7.2% inflation a dollar at the end of the period is worth half of a dollar from the start of the period.
So you need $2 to buy the same real amount as $1 would buy you at the start of the period.
Assuming that the first year was 1990 and the last year 2000, the property's real value in the year 2000 in 1990 dollars has not changed.
Assuming IO, your loan is still $44,000 - in 2000 dollars!
And it looks as if you've made $44,000.
But the $44,000 buys half as much, and your loan is effectively twice as much - net result, zero real return.
BUT you feel that you've made money (poor you!)
BTW: Your salary buying power hasn't changed either. It costs twice as much for everything.
Now if you instead took inflation at 7.2% and the capital appreciation at 10.2%, then the value of your asset is growing at 3% per year in real terms.
Alternatively take inflation at 3% and capital appreciation at 6% - you're also making 3% per year in real terms.
In these situations you do make some money by the end of the ten years. I'll leave it to you to figure out how much.
This should also explain why it's still possible to make money on assets in high inflation environments - provided the asset is appreciating at a rate greater than inflation!
Also keep in mind that an asset has to grow AT LEAST at the rate of inflation for you to break even (actually it's a little worse than this if you have leveraged debt over it at IO)
Cheers,
Aceyducey
PS: Consider your scenario killed Bill! (Part 3)
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