Buy and hold has, no doubt worked very well for many property investors, particularly if one can ride a cycle or two, or even more
There are proponents that suggest never sell, then there are others that use a model of leap-frogging into six or so IP's over a 10-12 year period (certainly very achievable) by allowing cap growth to duplicate deposits into each IP. A sell off of one or two (allowing for CGT) may see debt elimination or at the very least nominal debt with rental cashflow providing funds for retirement over and above super. Certainly nothing wrong with that, you'd still be well ahead of the masses financially
I do believe there comes a time where sometimes one needs to sell.
1. Perhaps to eliminate debt.
2. Selling off loser properties that are underperforming and thwarting portfolio returns.
3. Provide ready cash to take advantage of other investments. Equity can obviously be used however folding stuff has an appeal that gives one power to negotiate when banks frown upon over-extended LVR's in some circumstances.
4. One has seen such strong compounded growth in capital terms yet the asset is poorly yielding.
There are more reasons that could be listed and would certainly be dependant upon each investors situation with regards to stage of life and portfolio size.
I retrieved a title from one of my lenders recently and this property has yielded a twelve-fold increase in value over the past 24 years. It is also a pre-CGT asset.
It is a property whose yield is more akin to point # 4 above. I am toying with either setting up LOC or similar to give me (funding approved) purchase power over my next purchase that will be yield driven, perhaps in a trust where I loan to the trust from those funds and then I can finance the asset later and take my money back still having the facility to buy cash unconditional again with the approved funds.
Or...........whenever I find a decent yielding asset(s) buy using borrowed funds and sell the clear title at my lesuire and pay off that loan so that my returns are net of loans. I could just sell of this asset now and bank the money, however without another home for those funds by way of decent yielding investment property, I would rather hold off selling until those funds have a destination.
Now, I know there will be some of you that thinking, well just refinance against that asset and buy again and never sell. Save transaction costs and tax. Keep them all and live of equity. Ceratinly all valid points, howeverI have two pre-CGT assets that I believe I will sell at staggered times to achive a higher return on my money and if I choose retire all debt
The growth has been nice, however the current yield on property valuation is woeful. I may also get planning permits for it and sell to a developer having mitigated some risk for them. Sites like the property I own are highly sought after.
I could develop my self and thoght about that however that would poison the CGT exemption. Sometimes it is best to sacrifice the cow and start afresh with new cattle
I would be keen to hear from any others here who are debating whether to sell any asset(s) to improve their cashflow position.
Sometimes it becomes more prudent to sell than hold and harvest the growth properties ( as in my case) to replace with yield and for me it will need to be multi-streamed........ four pack or six pack or similar.
Is it time to harvest?
There are proponents that suggest never sell, then there are others that use a model of leap-frogging into six or so IP's over a 10-12 year period (certainly very achievable) by allowing cap growth to duplicate deposits into each IP. A sell off of one or two (allowing for CGT) may see debt elimination or at the very least nominal debt with rental cashflow providing funds for retirement over and above super. Certainly nothing wrong with that, you'd still be well ahead of the masses financially
I do believe there comes a time where sometimes one needs to sell.
1. Perhaps to eliminate debt.
2. Selling off loser properties that are underperforming and thwarting portfolio returns.
3. Provide ready cash to take advantage of other investments. Equity can obviously be used however folding stuff has an appeal that gives one power to negotiate when banks frown upon over-extended LVR's in some circumstances.
4. One has seen such strong compounded growth in capital terms yet the asset is poorly yielding.
There are more reasons that could be listed and would certainly be dependant upon each investors situation with regards to stage of life and portfolio size.
I retrieved a title from one of my lenders recently and this property has yielded a twelve-fold increase in value over the past 24 years. It is also a pre-CGT asset.
It is a property whose yield is more akin to point # 4 above. I am toying with either setting up LOC or similar to give me (funding approved) purchase power over my next purchase that will be yield driven, perhaps in a trust where I loan to the trust from those funds and then I can finance the asset later and take my money back still having the facility to buy cash unconditional again with the approved funds.
Or...........whenever I find a decent yielding asset(s) buy using borrowed funds and sell the clear title at my lesuire and pay off that loan so that my returns are net of loans. I could just sell of this asset now and bank the money, however without another home for those funds by way of decent yielding investment property, I would rather hold off selling until those funds have a destination.
Now, I know there will be some of you that thinking, well just refinance against that asset and buy again and never sell. Save transaction costs and tax. Keep them all and live of equity. Ceratinly all valid points, howeverI have two pre-CGT assets that I believe I will sell at staggered times to achive a higher return on my money and if I choose retire all debt
The growth has been nice, however the current yield on property valuation is woeful. I may also get planning permits for it and sell to a developer having mitigated some risk for them. Sites like the property I own are highly sought after.
I could develop my self and thoght about that however that would poison the CGT exemption. Sometimes it is best to sacrifice the cow and start afresh with new cattle
I would be keen to hear from any others here who are debating whether to sell any asset(s) to improve their cashflow position.
Sometimes it becomes more prudent to sell than hold and harvest the growth properties ( as in my case) to replace with yield and for me it will need to be multi-streamed........ four pack or six pack or similar.
Is it time to harvest?