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Hold or sell the dog?

Discussion in 'General Property Chat' started by skuzy, 5th Feb, 2016.

  1. skuzy

    skuzy Well-Known Member

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    Hi everyone
    Im looking for people views on strategies on dealing with 'dog' IPS.
    Do you simply hold until forever and draw as much equity out of this as you can or do u bite the bullet and sell when a opportunity presents itself.
    Im interested to know this because I have read in the past some investors simply don't sell their portfolio.
    Cheers
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Shoot the dogs.
     
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  3. HUGH72

    HUGH72 Well-Known Member

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    Whats a dog? Perspectives can vary.
    Does it impact cash flow, borrowing capacity or stress levels?
    Without more information its hard to comment further.
     
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Oh - you weren't being literal. Had me worried there for a second.
     
  5. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    If the dog has feathers, shoot it. Otherwise you may end up with an unexpected nest egg.
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Shoot the master. That way they'll never make that mistake again.
     
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  7. skuzy

    skuzy Well-Known Member

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    Cf+ but very low yield no development opportunitiy

    The analogies have been great so far but what's with this?

    Well then.. Should i beg ur pardon for not being perfect and learning this as I go?
     
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  8. Scott No Mates

    Scott No Mates Well-Known Member

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    @skuzy - learn from the mistake ( we all make them) either as we are unprepared, hubris, exuberance or just took the eye off the ball.
     
    Last edited: 5th Feb, 2016
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  9. Truly Exotic

    Truly Exotic Well-Known Member

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    Damn. Low yield but cf pos and you call that a dog!
    Hate to see what you call a mining town property thats dropped :):):)
     
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  10. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    We had one of these, Chrissy's first purchase at 19, her mum convinced her to buy on a main road so she could run a home business later on and advertise out the front. Purchased at the peek of a boom, value didn't reach the same level until about 8 years later, had years of bad tenants however the last tenant was pretty close to perfect.

    We chose to sell it early in the Sydney boom, didn't time the market perfectly and well and truly missed the top however by freeing up that cash we were able to purchase in our dream location for our PPOR at a very good price (house has good bones but it needs a massive renovation down the track).

    It really depends on your goals, if we didn't need to free up that cash I would have just left it as CF+ and accepted the fact that I will always forgo the bulk of CG (which fits with our buy and hold strategy).
     
  11. Foxdan

    Foxdan Well-Known Member

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    If you sell it, have you identified something better you can invest in with the money you now have available?
    If you sell it, are you still able to get another loan to invest in post APRA lending?

    If it costing you nothing to hold it, I think the two questions above should answer your question.
     
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  12. HUGH72

    HUGH72 Well-Known Member

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    So we know it makes money. Can you elaborate further, not necessarily location but how long have you held it? Any extended vacancies? New developments nearby? Does it impact on your ability to buy again?
    What isn't it doing over the timeframe that you expected? Why did you buy it? Is it the property or the location that concerns you?
     
  13. skuzy

    skuzy Well-Known Member

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    Well the original dream/strategy was to build a duplex on this but after a long painful learning process it will simply not happen due to various local council regulations.

    Whilst cf+ . I mentioned rental yields are low.. This is based off original purchase price which was pre-boom .. Don't even want to speculate what the yield is today on market value lol..

    It Costs nothing to hold but I recall reading a post sometime ago from a member who did well on ss talking about the need for on going review of your portfolio and flipping 'dog' ips to free up cash and invest on better performing ones.. That said I also see a lot of posts/articles of "I buy never sell" .
     
  14. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Look at the opportunity cost - is it holding you back? It's not costing money, so really the only way it's going to hold you back is if it's not going to allow you to borrow further to access the equity.
     
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  15. BigKahuna

    BigKahuna Well-Known Member

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    Look for a better investment. When you've found it, sell the dog.
     
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  16. Perthguy

    Perthguy Well-Known Member

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    This happens. I just found out my 4 unit site in Perth can only be developed with one additional unit now if I want to retain the front house, which I do temporarily.

    Since it is a larger site, could you build some kind of ancillary accomodation (granny flat) to rent out to increase your cashflow? Of course this depends on demand, cost, return, council rules etc, just throwing it out as an idea.

    haha. I am a "buy never sell" kind of guy too. However, I have sold 2 out of 3 of my IPs. I sold the first because it was a dog and I had a much better investment opportunity. I sold and put the money into the other deal and it has worked out well. The other I sold because it had increased a lot in value but was cf-. Not good for a long term hold. There are arguments for retaining and arguments for selling but each circumstance is different, so 'never sell' sometimes doesn't apply.
     
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  17. Xenia

    Xenia Adelaide Property Manager Business Member

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    Get a cat, they are independent, clean and not needy and will survive with or without you.
     
  18. dabbler

    dabbler Well-Known Member

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    A Leech.
     
  19. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Generally this falls under opportunity cost. If it isn't costing you anything but it's not doing what you want it to do.

    If you sell it, do you have the available funds to then purchase a duplex block as per the original intention.

    If the area has seen some good growth then now might be the time to sell it and go put the money to use somewhere else.
     
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  20. Ran Gus

    Ran Gus Well-Known Member

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    It's really unique to each situation isn't it?

    You hear many a story of people selling 'dog' properties too soon that end up regretting it, and conversely there's many people who hold onto poor investments for too long and wish they'd sold earlier.

    The buy and hold strategy has become more and more popular because people have realized that as a collective we're incredibly bad at trying to time markets (professionals and amateurs alike!), and because this has worked well in the last few decades. As much as everyone disclaims it, most people inherently believe that past performance is an indicator of future results.

    @Jess Peletier has nailed it in my opinion - what's the opportunity cost of holding the property? What could these funds be doing instead, and am I happy to take the chance that switching will hurt my net position rather than improving it? It's a calculated risk that only you will know all the factors of.
     
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