Strategy question

[TMNT]

Well. Long story short

Over the past couple of years ive bought a fair few ips

All under sub 300k. A few in mining dependant area

Most have done quite well. A few have moved nowhere despite sydneys boom (nsw regional)

At present. Cash flow is ok. Cash is low. Serviceability is average

I feel that when sydney slows down. Mine will slow down too (thats if you can go slower then zero)

I feel that timing wise. Ita better to let go of these non performing ones before the Sydney slow down kicks in

After i sell there wont be that much cash

Im thibking of selling the non performing ones and holding on to my good ones. And not buying anything else for a few years and do shares or another business ie totally withdrawing as all bluechip areas are booming and competitjon is fierce and i feel there is risk whilst the regionals are still affordable but have not done much

What so people recommend

 

[Rixter]

What was your strategy when starting out? Has it changed? If so, why has it changed? What is your end destination for investing in property in the first instance? When looking to invest in what ever asset class, ask yourself will having, owning or controlling this asset move me towards your end destination.

I hope this helps.

 

[WattleIdo]

I would think that the focus will move out of Sydney to other areas - Melbourne, Brisbane, Tassie, Adelaide, regionals.
But I don't know which regionals. If they're in mining towns, it depends what kind of mining and what other industries are there to give the place a purpose.
Life is good in some NSW regional towns. There'll be migration at some time or another. If you're in lifestyle towns, work on prettying your places up a bit. Try to attract a retiring baby-boomer.

 

[hugh72]

A bit hard to give any thoughts without knowing the locations. Have the fundamentals changed? Do the reasons you purchased there considering your strategy still exist? Do you own many capital city properties as a balance?
I don't mind the bigger regionals providing there's some diversity of industry etc.

 

[Deltaberry]

Would need some more info to really assess

If you hold some awesome land in Syd and can afford 8% interest rates hold it. If they are not great or you cannot afford to hold, situation changes.

 

[TMNT]

Thanks everyone. Based on my researxh. I was expecting the regionals would either do better then the average in terms of %cg (this was before the sydney boom)

Unfortunately. Maintenancw on these has been higher then expected.

Was expecti g them to grow decently. Then keep on buying

But i feel that the regionals eg bathurst wagga etc arenot going to do well especially if the boom in syd ends

 

[hugh72]

Once Sydney slows whenever that may be those nice capital gains will need to find a home, investors will spread their search. For the last couple of years investors in Sydney haven't needed to look elsewhere, when they do things might change

 

[Azazel]

But i feel that the regionals eg bathurst wagga etc arenot going to do well especially if the boom in syd ends

Other places don't necessarily go up with Sydney, there can be a delayed 'ripple effect'. If Sydney stops, there's still the potential for it to keep spreading out. Canberra will probably be next for the spruikers.

 

[TMNT]

Yes i am also in the belief that once sudney gets overpriced the regionals start going up

However i dont see any build up of the regionals and thibj that maybe the fall in sydney eill come and the regionals will be the same

 

[Reality Cheque]

Last time sydney boomed there was a regional ripple effect that didn't really get going until after the sydney boom had ended. Most regional areas haven't done much for quite a few years so they may be set to benefit again.

 

[TMNT]

the opportunity cost of holding these isnt so high, eg I dont have heaps of equity in them since they havent moved much plus they are cheap, its not as if I would take the $ and buy somewhere else,

I dont have any what is called A grade properties in syd or melb as Im in the totally different price range as to many on here

so yeah, still deciding on whether to withdraw fro mthe market for a few years and just keep my eye on them and go into shares or do nothing, as even development sites say 2-4 dwellings are just as competitive as anything, I really dont think its smart competing with the herd

 

[LeoT]

Hi TMNT,

If you haven't already, I would really go back to the beginning and clarify your goals and strategies to get there. Reflect on your current position to try and determine what you can do to get back on course with your goals. tweaking your thinking, approaches ect to realign you on the path you want. I do exactly the same thing. Hope it helps.

Cheers

 

[TMNT]

Hi TMNT,

If you haven't already, I would really go back to the beginning and clarify your goals and strategies to get there. Reflect on your current position to try and determine what you can do to get back on course with your goals. tweaking your thinking, approaches ect to realign you on the path you want. I do exactly the same thing. Hope it helps.

Cheers

as you are very aware goals and strateiges change, I m looking for a LOE and LOR approach with a higher concentration on LOE, the way Isee it LOR is a given (alabeit slower and predictable), while LOE is more unpredicatable,

goals havent changed, however, the lack of growth in my regionals (unfortunately) with what I see is potentailly only down fall due to sydney boom either ending or slowing down soon, Im thinking of getting rid of them

but some here say regionals lagg a lot further behind time wise,
which does sound reasoanble as well

 

[LeoT]

as you are very aware goals and strateiges change, I m looking for a LOE and LOR approach with a higher concentration on LOE, the way Isee it LOR is a given (alabeit slower and predictable), while LOE is more unpredicatable,

goals havent changed, however, the lack of growth in my regionals (unfortunately) with what I see is potentailly only down fall due to sydney boom either ending or slowing down soon, Im thinking of getting rid of them

but some here say regionals lagg a lot further behind time wise,
which does sound reasoanble as well

Are you able to then just hold on to the ones you have while adding to your portfolio? If they aren't a big drain, and your cash flow is ok and serviceability allows to add more, is it an option?

 

[LeoT]

And not buying anything else for a few years and do shares or another business ie totally withdrawing as all bluechip areas are booming and competitjon is fierce and i feel there is risk whilst the regionals are still affordable but have not done much

I don't know your personal position, age, etc and I know we all have different risk profiles. If im being totally honest and wanting to give my honest feedback, the above paragraph or reasoning behind it might be key. just maybe. Mate I know we're all in the same boat, trying to make the best we can for ourselves.

 

[Peter_Tersteeg]

as you are very aware goals and strateiges change, I m looking for a LOE and LOR approach with a higher concentration on LOE, the way Isee it LOR is a given (alabeit slower and predictable), while LOE is more unpredicatable

LOE is a very unreliable strategy. The problem is what do you do when you've spent all the equity? Presumably you've now got more equity but as you may no longer be employed it's going to be very hard to convert that into cash. The recent changes in lender policy will have made this even tougher. (Queue the annuity discussion, but some of the policy changes have directly mentioned these as well).

Retiring on rental income puts you outside of the banks (and regulators) hands. Far more stable. Selling off some property and moving the money to other assets such as dividend based shares can also give you great results.

 

[TMNT]

Are you able to then just hold on to the ones you have while adding to your portfolio? If they aren't a big drain, and your cash flow is ok and serviceability allows to add more, is it an option?

yes can hold on, however the maintenace issues are getting to me (I think I need to stand back and just think with my head, not with my headaches, one of the ones thats doing my head is is that whevner a tenant leaves the house gets broken into and smashed, multiple insurance claims)

I don't know your personal position, age, etc and I know we all have different risk profiles. If im being totally honest and wanting to give my honest feedback, the above paragraph or reasoning behind it might be key. just maybe. Mate I know we're all in the same boat, trying to make the best we can for ourselves.

yeah 39, 3 kids, work part time, enjoy life. wanted to get into development, but lack of serviceability and cash and the hot market, im thinking about stop looking

LOE is a very unreliable strategy. The problem is what do you do when you've spent all the equity? Presumably you've now got more equity but as you may no longer be employed it's going to be very hard to convert that into cash. The recent changes in lender policy will have made this even tougher. (Queue the annuity discussion, but some of the policy changes have directly mentioned these as well).

Retiring on rental income puts you outside of the banks (and regulators) hands. Far more stable. Selling off some property and moving the money to other assets such as dividend based shares can also give you great results.

yes of course, LOE is a unreliable strategy, Im not too fussed whether it takes 5 or 10 or 15 years, im looking at the big picture ,and if my pay off occurs a lot later, ill still be happy, im not looking at going downt he path of depending on CG eveyr 5 years for a refinance, thats not for me!

 

[LeoT]

yeah 39, 3 kids, work part time, enjoy life. wanted to get into development, but lack of serviceability and cash and the hot market, im thinking about stop looking

OK, so I guess your current lifestyle is something important to you, then I get it. Then if your not too fussed about 10-15 years, and taking into account your chosen current lifestyle which your happy with, why don't you just hold on to what you have and add more as it allows so you can continue to slowly build wealth so in 15 years time you will have more options, whether that means LOE or LOR or a variation, you'll have better options because of the equity you created by now adding to your assets (provided you can do it slowly and relatively safely).

In terms of the breaking ins.. perhaps try to minimise the empty periods and increase the security measures when there empty..?

Cheers

 

[Rixter]

as you are very aware goals and strateiges change, I m looking for a LOE and LOR approach with a higher concentration on LOE, the way Isee it LOR is a given (alabeit slower and predictable), while LOE is more unpredicatable,

yes of course, LOE is a unreliable strategy, Im not too fussed whether it takes 5 or 10 or 15 years, im looking at the big picture ,and if my pay off occurs a lot later, ill still be happy, im not looking at going downt he path of depending on CG eveyr 5 years for a refinance, thats not for me!

Have you considered accessing a property cycle (~10 years) of equity for lifestyle expenses in your LOC's prior to exiting the rat race? That way you have it up front instead of being dependent upon market conditions waiting for it to materialise.

LOE is a very unreliable strategy. The problem is what do you do when you've spent all the equity? Presumably you've now got more equity but as you may no longer be employed it's going to be very hard to convert that into cash. The recent changes in lender policy will have made this even tougher. (Queue the annuity discussion, but some of the policy changes have directly mentioned these as well).

Retiring on rental income puts you outside of the banks (and regulators) hands. Far more stable. Selling off some property and moving the money to other assets such as dividend based shares can also give you great results.

Post ~10 years LOE one then has the option to fully LOR with no need to sell off.

 

[Sean M]

Sounds like an interesting scenario. The key here is the amount of cash flow from what you have said. If you had the cash flow you would probably never sell.