Originally posted by lucky_phil
Well, we read buiding wealth through real estate, followed
most of it, now have 9 properties with over $1M equity.
But nothing lasts forever.
We are thinking of selling 4 (our first rentals) bought in outer
Southeast Melb, they have more than doubled in value, and we
would like some cash.
Other concerns are that the area is unlikely to increase as much again, and we may do better in Qld at the moment....
Any flaws in this reasoning? all comments welcome.
Thanks to Jan Somers, it really does work!
9 IP's well done, you are one of the top 1% of property investors in australia.
I think there is a common perception (consensus of opinion) backed by some good economic data suggesting that property prices have increased above and beyond that expected by historical and current economic growth, ie prices today are consistent with expectations of prices in 5 years time. ie. we have probably experience most of the growth we can expect in the next 5 years. To expect the next 5 years to show the same growth as the last 5 years is not rational.
Naturally this is just general market conditions, in regard to specific properties and specific areas naturally oppotunities will exist.
Looking at your case. What happens when you sell
a) You pay the REA.
b) You pay captial gains taxes
c) You pay Legals
d) You pay accountants
What's left over is your profit....it will be considerable less than your equity! I guess you could loose 30% of your equity converting it to cash in the bank.
Equity is king, equity is capital. With equity you can do many things. So my basic question is "What do you want to do, and why having cash in the bank makes it possible in comparison to having lots of equity and means of accessing it (LOC)?"
So if your properties are not too negatively geared and placing a burden on you day-to-day expenses what is to gain by selling? Lets say they grow zero in the next 5 years, but are neutrally geared and you can use the equity in them to launch further investments, what is different to selling them ( ie by definition if you sell your expected returns on those assets become zero) and using the profits/cash to launch further investments?
The weak point to my suggestion is the fact that "What if prices decrease", history has not been written and nobody knows how this boom will end with a bang or a wimper.
Congradulations in having 9 IP's, I am doing the figures now and I should soon (at the conclusion of my current development project) reach the magical $1M in equity...ie should soon be a paper millionaire.