Cashflow versus equity
over the last 6 months, a solid 5% drop of my total property portfolio of $4m+.
If your IP's are near where you live, I'd say the softening would be more than 5%
Fortunately, the 18 months before saw a rise of about 15% so that would mean I'm 10% up, less inflation, less my small NG component +the devaluing of my debt against inflation etc. Fortunately, I've been in the game for a while so a couple of years does not yield a trend.
Unfortunately, I cant see much up side this year but I have a fair amount of work on to keep me going for a little while. Just have to work out how to pay private school fees
Pieman, it sounds like cashflow is the issue here and not equity softening. These properties that have given some ground, would still be returning you the same rent..............unless you were counting on servicing school fees from equiy (LOC or offset or similar). Not sure on your strategy.
If it's cashflow then, perhaps look at trading a high cap growth asset for more of a yield play.
I have sold our former PPOR close to your parts and let me tell you, the softening was more than 5% over the past six months. Sentiment of the herd even in bayside Melbourne is watch this space............
It's precisely that sentiment that has stalled much of the Melbourne market that I am familiar with. Herd mentatlity and all that.....there is (perceived) safety in numbers. The buyers are in well and truly in control now and are pulling the puppet's strings.
We sold as those (cash) funds will seed opportunites up north, Brisbane specifically to further increase rental income for us. To have rented it out, and copped a circa 2.5%-3 % gross yield and the disproportionate land tax impost whilst worrying about the tenants looking after pool, gardens etc, would not be prudent for our situation. I don't see that market moving for a couple of years and, that excludes any other black swan event, flying PIIGS and other global speed bumps.
I still have exposure to properties that are of the capital growth ilk nearby, so will ride those coat tails during the next major upswing, which may take 5-7 years IMHO.
I am pleased we have quit two high land worth properties in Melbourne, one a year ago and our recent sale. Yields will remain ordinary for now in Melbourne.
Your further post will help your situation less. If you are looking for an old box to eventually bulldoze on good dirt you will be impacting your cashflow further in negative gearing costs from your pockets using after tax dollars.
If you want/need cashflow (as your OP indicates) you will need a different asset and more than likely a different location. The growth swings are (as you would no doubt be aware having been in the game for a lengthy time) par for the course. If LVR's are sensible, there should be no problems on that score.
Good luck with your future strategies