When do you sell an IP?

[stumpie]

Hiya folks

I've been reviewing some of my IPs and am quite happy with their performance except 1. The average growth of this IP has been good except there are a couple of things which i feel may slow this down. its an old house 1960s and the rental potential naturally is not that great compared to the median rent for the suburb. the other issue is its not in a good street.

i've made the comparison between the IP's growth vs the suburb's median growth and it's actually better than the median BUT when i look at the yearly increase in the median and % of growth for each of those years most of the growth came from 2006 & 2007 and the fact i started with a very low base.

would like any comments from you folks on how and what parameters you evaluate to sell the IP?

 

[thatbum]

Well those parameters aren't the ones I would use to assess likely future growth. For example "most of the growth came in 2006/2007" pretty much applies to most of the properties in WA. Also, any reference to "median suburb growth" is nearly useless in my opinion since its just a generalised statistic most of the time.

Have you been keeping a track of the number of sales vs the number of listings for comparable properties over time?

 

[nhg]

After speaking with many many many investors. Their biggest regret has been NOT keeping a place.

My philosophy is only sell when you have to.
- to increase borrowing capacity
- loosing massive amounts in negative gearing
- need the cash for another investment

Selling for the sake of selling when you are still able to continue your investments regardless, I feel can be quite detrimental.

 

[stumpie]

After speaking with many many many investors. Their biggest regret has been NOT keeping a place.

My philosophy is only sell when you have to.
- to increase borrowing capacity
- loosing massive amounts in negative gearing
- need the cash for another investment

Selling for the sake of selling when you are still able to continue your investments regardless, I feel can be quite detrimental.

nhg
at the moment my intention is to recycle the equity to newer assets to keep R&M more manageable.

 

[Peterw]

When you take into account, the costs to sell, and then the costs of the new purchase, that would cover quite a bit of R & M I would think

 

[Jen_PFR]

We sold two single bedroom apartments in 2008. The market in Perth was only just starting to slow down, so we got extremely good prices for both. (As an indication, single bed properties in the same suburbs are only just now selling for the prices we achieved).

There were a couple of issues which pushed us into selling. The first was that both were in really badly managed apartment complexes. For example, in one of them, the strata manager had to raise an extraordinary levy to pay for the complex's electricity and rates. eek In the other, significant plumbing works were required to be undertaken which would have cost an absolute fortune. The second complex was a group of 10 so the cost would have an enormous impact on the small group of owners.

Finally, at the point we were considering this, we had realised that two bedroom properties were much easier to tenant, and we wanted to concentrate therefore on properties which had more than one bedroom for this reason.

I am still very happy with the prices we got and the ease with which we sold the apartments. We would definitely do the same thing again if in similar circumstances.

 

[travelbug]

After speaking with many many many investors. Their biggest regret has been NOT keeping a place.

My philosophy is only sell when you have to.
- to increase borrowing capacity
- loosing massive amounts in negative gearing
- need the cash for another investment

Selling for the sake of selling when you are still able to continue your investments regardless, I feel can be quite detrimental.

Good points. If the money will be of better use elsewhere then sell to fund that. If it's losing you money and the CG won't change that then it's a loser. Sometimes it is better to get out.
My only regrets are selling (and not buying a few that I wasn't sure about due to inexperience).

 

[joeExpat]

I've never regretted selling, but I do regret one purchase which has declined significantly in value.

Main reason for selling has been to get better income returns elsewhere (stock market). End goal 0 or 1 properties, most assets in shares.