Have you had enough? Ready to sell the portfolio?

Discussion in 'Investor Psychology & Mindset' started by Owlet, 21st Jan, 2022.

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  1. Owlet

    Owlet Well-Known Member

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    Another call from a PM this morning, tenant late with rent, they mentioned they are moving interstate and will likely break their lease....
    Different IP - tenants give notice, PM starts process for new tenants and inspections - no takers - only to find out when we physically go to the property that the house reeks from animal urine - all carpets need to be ripped up.
    New electrical and gas safety checks - additional expense
    Vic Land tax - wiping out any rent increases.
    Legislation in favor of tenants - many ways they can wiggle out of their leases versus 4mth plus and stringent reasons for landlords to do the same

    Has anyone had enough and just sold their portfolio?
     
  2. Sackie

    Sackie Well-Known Member

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    Cost of being in business, unfortunately.

    I own business seperate to real estate as do most of my friends and the headaches we sometimes have to deal with puts tenant frustrations in the picnic category.


    This is where mindset comes in.


    And sorry to hear about your troubles
     
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  3. Owlet

    Owlet Well-Known Member

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    Thanks Sackie. Absolutely - the cost of being in business.

    When do you say - I've got enough - I can sell down and make my life comfortable and simpler?
     
  4. sash

    sash Well-Known Member

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    Is your house in a lower socio area?

    I am slowly divesting out of lower socio which initially got earlier on...most have more than doubled. Now only investing in new houses in solid middle class areas.

    As for VIC land tax it is very reasonable.

    You will have all sorts of issues if you hold long enough. Make sure you have insurance.

    The other thing is look at the bigger picture. Also when property is primed for sale and the asset is not a solid asset...look to take profits.

    I have sold 7 in the last 3 years..no regrets...the plan is to have 60-80 new properties and 20-40% rebuilt/reno'd properties in the next 4 years.

    Always have an exit strategy a lot on here crowing about growth...but how many have an exit plan when the eventual downturn happens?
     
  5. Indifference

    Indifference Well-Known Member

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    This question resurfaces every cycle and can also be relevant to individuals more or less depending on where they are at in their journey & life phase.

    My thought process is that when these thoughts surface, refer back to the business plan… the reason for investing in the particular asset. If that reason is no longer valid or the particular investment no longer fits with the current stage of the business plan, then take action. Otherwise, mitigate or exercise mitigations from your business plan / strategy. (Ie. sell down, redevelop, rebrand etc… whatever is relevant)

    Too often I find myself discussing the long game with investors who failed to consider it properly in the first place…. By that I mean that often people forget to plan for what to do once the capital base is built to the desired level. At that point, what did you plan to do? Sell down, shift into another investment class/vehicle, hold & accept the yield as is or did they not really consider this part of the journey at all….

    My mantra has been - Balance. Between short & long term, between growth & cashflow, between pleasure & pain (ahem… fitness/health), between hold & sell etc…. There is really only one commodity that rules them all & it is not $$$….. it’s time. If we can’t use $$$ to make the best use of our limited time on this rock (whatever that is a personal perspective) then all we have is ego. Which is a sure way to live a sad life regardless of the size of portfolio…. My 2 cents
     
  6. sash

    sash Well-Known Member

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    Yep...always have an exit plan...reading the posts on Sydney/Melbourne/Brisbane ....98% on here have no exit plan.

    If you just acquire....great whilst market is booming...what happens after the music stops for 3, 4, 5, 7 years?
     
  7. Owlet

    Owlet Well-Known Member

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    We had a plan and it has been executed. The properties we purchased have doubled in value in the last 7 years which is great. 12mths ago we changed jobs for lifestyle reasons but with a significant drop in income.
    We have contingency funds - which we are now dipping into to support the Portfolio. We are also expecting this year's land tax bill to put us in the max range. 27k - that equates to $500 per week! That is the rental income from one IP gone straight away.
     
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  8. Owlet

    Owlet Well-Known Member

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    Thanks Sash - great points to ponder. I also have to consider what I do after I sell.
     
    Last edited: 21st Jan, 2022
  9. Owlet

    Owlet Well-Known Member

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    Thanks indifference - more great points. I think your last paragraph is what is causing me the most distress. There is no point having a sizeable portfolio if you are not living a happy life.
     
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  10. Indifference

    Indifference Well-Known Member

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    To me at least, this says that “you had a plan & it has been executed” therefore you lack an enduring plan…..

    That’s ok, most do. But…. A problem known is a problem that is resolvable. So what is your “current” plan…. Remember, plans change, they should change & therefore they need to be periodically reviewed & update. Every successful business does this.

    Be the change you want to see…. Reassess & take the action you deem necessary for the current circumstances/climate & reviewed goals.
     
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  11. sash

    sash Well-Known Member

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    I hear you...my land tax across 5 states was dropping...it was about 34k last year. But with Qld changes it might be more.

    Did your exit plan make provisions to shift some real estate assets to equities/ETF/ etc?

    I am still at 29 properties despite selling..as I acquired...5 over the last 14 months. I am selling another 3 this year. I will but another 2 block..and then that is it. The plan is to be totally debt free by 2024. ...lets see how that goes.
     
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  12. Piston_Broke

    Piston_Broke Well-Known Member

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    Yep, owned 10-30yrs.
    It is the cost of business, though I see these costs increasing considerably for the next few years.
    Real Estate Sell Down

    The problem is that with gov housing reducing thay are given rental money and move to the better areas.
    PMs need to be able to filter the applicants, and it does'nt always workout.
     
  13. sash

    sash Well-Known Member

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    Yeah saw that...you are one of wiser ones...the older you get even in your 50s you realize time is finite money is not if you know how to make it. ;):D:p

    Mark my words...this cycle you will see a lot of pain just like in 2007-2009...where some forum members took a massive hit some had tome on their hands...so did no. Believe or not cash will become King again!
     
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  14. Owlet

    Owlet Well-Known Member

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    Exit plan was pretty simple - acquire, sell half, pay out loans and rental income replaces work income. To be honest - I never really believed I'd achieve it. I didn't have a good understanding of trusts so properties were purchased in own name - hence land tax now an issue. With other increased costs - the rental income isn't that great.
    I need to invest some time in looking at the next steps - yes I am considering going down the ETF path.

    Thanks for your input - it has turned my morning slump into me wanting to turn this around and keep moving forward.
     
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  15. Gen-Y

    Gen-Y Well-Known Member

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    Bookmark for future reference ;)
    There are many golden material to review from Sash man.
     
  16. sash

    sash Well-Known Member

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    No worries.....my view is property income is VERY VERY lump for exactly the issues you have highlighted. The right ETF with diversity (i.e VAS/VGS) will give you a 4% drawdown. Having some property for future growth is also great.

    Good luck....
     
  17. sash

    sash Well-Known Member

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    Yep.....sure will book mark away. :D

    Oldie but goodie....

    The Mother of All Booms is Coming??
     
  18. Sackie

    Sackie Well-Known Member

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    Indifference pretty much summed it up for me with his insightful post. Adding anything more would be superfluous.
     
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  19. jim1964

    jim1964 1941

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    I have pushed the exit plan button.When i finish my current development in Christie's Beach,im retiring to Tasmania.Treated always as a business,buy,sell,sack,employ,sue,compensate,it does wear you down over the long term,but hey,risk versus reward.
     
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  20. mistercoffee

    mistercoffee Well-Known Member

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    I was originally a residential property investor and I think I did reasonably well. But there were many stressful moments, with lousy tenants, incompetent property managers, expensive tradies, and difficult insurance companies. One of the highlights was when the tenants of my terrace house in Coburg set fire to the back porch and the neighbour's back shed. And those tenants were a respectable "professional couple".
    Also, I realised that the longer I held onto the properties the higher the maintenance costs would be. I have better things to do in my life than stress out about my investments, and I wanted a more reliable income as a retiree. Nothing to do with "mindset"; property investment was never really for me. Horses for courses, as they say.

    So I decided to liquidate all my properties apart from the ppor, and put everything into shares - mainly LICs and a few individual stocks. These days, life couldn't be better. I get a great income (much more than I need) from my portfolio, and the only time I really think about my investments is during reporting season when I find out how much of that reliable fully franked income I'll be getting (usually more than the previous year). Not stressful at all.
     
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