To sell or not to sell

[marc1]

Hi there!
Haven't been here for a while and would like to pick your brain on the topic of, "to sell or not to sell."

This is the situation.
I have two investment properties in Sydney, one in the Campbelltown area and the other in the Liverpool area. My own property close to paid off from selling a few block of flats in Mt Isa in the good times. Also have bought recently a holiday home at a bargain price but I owe the lot on that and I would like to keep it.

The rental in Campbelltown makes a small loss and owes 240k worth around 300k now, the one in Liverpool is in positive territory, owes 130k worth 400k. Considering the little boom at the present time with first home buyers, I thought I will have to wait probably 3 years or more to see the current price again, however can not decide to sell, particularly the Campbelltown one since the small loss does not bother me and end up in the tax anyway. After agent fees and capital gain tax, I will have little to show for it.
On the other hand ... hum ... what do you think?

Thank you in advance
Marc

 

[Perp]

Why would you sell? Are you having problems with the tenants? Do you think you could make more investing in something else? Do you need the sale proceeds to buy a new kidney? Why did you initially buy the property?

It's very hard to give suggestions without understanding what your objectives are.

 

[marc1]

Ok ok...no don't need a kidney, tenant is a jem, have no problem with the bank, I'll make so little money if I sell that I couldn't upgrade my boat with the proceedings.

I just think that if prices go down (again) as they did a few years ago, I will (again) kick myslef for not selling when the price was right...wich is not because I am not going to make money anyway, so why sell (right?)... Omagosh I am talking nonsense.

Objectives? mmm more like goals. Finish paying off my two properties, home and waterfront weekender.
If prices are on an up trend, all I need to do is wait and eventualy equity = debt, voila!
Downward trend, debt stays the same, equity goes down. Bad.

Mumble Mumble

PS
Hum...just had a peep at your investment "speciality" ... (sounds like a chef's signature) manufacture and hold. I like that!
I spent the best of 5 years "manufacturing" my own home every spare moment. Turned a 3 bedroom cottage in a a 6 bedroom 2 rumpus, terrace, balcony spa, shed you name it 3 bathroom two story palace and my third kid is getting married and the forth is finishing year 12...(moorooon)
Yet my investment properties are as original as they were in the seventies.
However...who spends money on properties in a lousy market like this? You will never get your money back I can hear the eco in my head....

I think it is getting too late. My brain usualy stops functioning after lunch with the amusment of my customers.
Hooroo.
Marc

 

[BV]

Marc

I think propery won't be a high performer for a while so if you can do something better with your money go for it.

But if you arent't going to use the money for something productive
I'd say leave things as they are.

Low holding costs is a plus but it's now with record low interest rates.
In 1 year when interest rates turn (and they will), you'll start feeling the pain again.

Have you considered selling privately?
Those 2 are both my target areas so if you want to offload any of them send me a PM with the adresses and your asking price I will see if they are what I am after.

cheers

 

[Perp]

Marc1, I suspect you're making a classic logical error. When people aren't feeling good about their investments, they ask:

"Should I have made this investment or not?"

When they should be asking:

"Am I better off selling or holding?"

The answer can be "no" to the first question, in light of what you know now, yet "hold" to the second question. ie It may be that you would have been better off having made an alternative investment, but now that you've made it, you're better off sticking it than selling it.

So, you simplify things to these three questions:

1) How will my income be impacted if I sell?

2) How will my net worth be impacted if I sell?

3) How is selling likely to affect my income and net worth in the future?

4) How will it affect my peace of mind if I sell?

You'll end up with the two "sides" looking something like this:

Hold: $50 pw in net cashflow, $200K equity in the IP, increases in CF every year, equity increases uncertain over next 5 years, no change in peace of mind.

Sell: Lose $50 pw in cashflow, $100K cash after CGT and selling costs, could invest that $100K to earn $8K income but no change in equity, slightly less hassle.

Then it becomes your decision as to which scenario has overall more appeal to you. Is the extra $110 pw that the second scenario yields, with less hassle, worth the loss of $100K in equity of your portfolio?