It's OK to SELL

Discussion in 'Investment Strategy' started by MTR, 5th Jul, 2017.

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  1. MTR

    MTR Well-Known Member

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  2. MTR

    MTR Well-Known Member

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    Its still OK to sell.... just a little reminder sometimes its all about the timing.....knowing when to bail so you can move forward, don't stay stuck..... and this.......


    Steve's McKnight's words here......
    Investors who never sell often reach financial fatigue – a phenomenon where they are asset-rich but income poor and are unable to service more debt and hence can no longer grow their property portfolio. This is like having fat cows that refuse to mate, and they produce less and less milk.

    Here are three common situations I am asked about:

    Situation #1. My property has increased substantially in price. Should I sell it?

    Situation #2. My property has not performed like I hoped it might. Should I sell it?

    Situation #3. My property has dropped in value. Should I sell it?

    “If you wouldn’t buy it then maybe it’s time to sell it” paraphrases one of the tests for whether it is time to sell. That is, if you own a property and wouldn’t buy it again (i.e. believe it would make a good investment at its current market value), then perhaps you should sell it and deploy your capital elsewhere.

    If you’re sitting on big capital gains and are afraid to sell because of the tax consequences, let me ask you this: what is driving your decision making – scarcity or abundance? That is, have you become defensive about protecting what you have at the cost of expanding your wealth?
     
  3. Sackie

    Sackie Well-Known Member

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    @MTR I agree selling isn't necessarily a bad thing. I do know a lot of people though who choose to rarely sell and keep their gems long term. They want a relatively safe place to store their wealth and don't need to aggressively use equity anymore to expand.
     
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  4. Dean Collins

    Dean Collins Well-Known Member

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    Can be less eg 0% of you make less than 50k a year. Though yes for most people in the USA its 15% (though it jumps to 20% once you make $400k a year eg its dependent on overall income)

    Long term Capital Gains Brackets
    Long-Term Capital Gains Tax Rates in 2017

    and Income Tax tax brackets are here
    Your Guide to Tax Brackets in 2017

    Basically it works out to be the same as Australian property EXCEPT if you own Australian property and live overseas in which case the Australian government in all its wisdom has decided to REMOVE the 50% capital gains discount for Australian expats living overseas which is why I now REFUSE to purchase any further Australian property investments and instead am quite happy to put my excess investment funds into USA equities.

    The fact that this decision was made and the Australian property market topped......well what can I say sucked in for Australian govt....you deserve it.
     
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  5. Dean Collins

    Dean Collins Well-Known Member

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    No is the answer to all 3 unless you need the money between now and when you retire.

    Eg you have already spent all of the purchase/sale costs (stamp duty-commissions etc).
    Unless you need the money between now and when you retire OR you can guarantee that property is going to crash 20-25% before you buy back in......then its just going to cost you money in the long run.
     
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  6. Dean Collins

    Dean Collins Well-Known Member

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    UHm why do you think if you have it in a trust this wont affect you?


    ....and you realize that they did this for all foreign buyers and expats right? This is why foreign buyers aren't interested in buying in Australia anymore unless they are laundering money/seeking offshore security.
     
  7. MTR

    MTR Well-Known Member

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    Property is all about cycles. Markets don't continue to rise every year. Can you make more money with the sale proceeds?? If so why not cash in the chips.

    Better than paying off interest rates/debt when the market is doing nothing?? a correction could take 7 years..... something to think about

    MTR:)
     
    Last edited: 19th Nov, 2017
  8. Sackie

    Sackie Well-Known Member

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    @MTR you're a developer and actively looking for ways to make your dollar work hard for you. However for many ppl, they have trouble making money from buy and hold, so the idea/viability of them making money by actively trading the market during cycles and then more importantly being able to buy into superior deals to make more money in another cycle is for most - fantasy.
     
  9. MTR

    MTR Well-Known Member

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    But you don't have to develop? Nothing whatsoever to do with this

    there is no right or wrong, I am just pointing out there is more than one way to make money and buy and hold strategy just got a little harder, if you can not source finance you can not buy, the playing field has changed.

    This thread is really about opening eyes to possibilities and strategising

    What investors do with this information is their choice.
     
  10. Sackie

    Sackie Well-Known Member

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    It's not so much being a developer, its more the skills and analytical/DD experience many developers have which is a great help when looking to sell at peaks then buy good deals in other cycles. I honestly dont believe its that easy a task for the average investor to do, considering all the costs involved, you wouldn't want to make a wrong choice.

    I'm not disagreeing with you, i agree no right and wrong.
     
  11. Dean Collins

    Dean Collins Well-Known Member

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    Yes but the cost of getting in and out in Australia is high (and rightly so or we could end up with a situation like NZ where properties trade too often).

    Unless you see a fall of 25% you are just going to be buying in later but instead be 7% behind the curve.

    relax, go to the beach, pay down your debts, let your tenants do all the heavy lifting etc, lock in your rates for as long/low as possible.....let someone else try to catch the falling knife.
     
  12. MTR

    MTR Well-Known Member

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    Part of business. As long as the profits far exceed these costs then what is the issue? If you can use these proceeds to increase wealth in shorter time frame why not?
    Not saying buy and hold is bad, or my way is the right way? just saying perhaps look at all options, sometimes selling can be good. Sydney market is now tanking, some investors have already sold out, they know when markets correct property prices fall back.
     
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  13. Luca

    Luca Well-Known Member

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    As a new starter the concept of selling is hard to be digested, after so much work in find the right asset? I guess unless you want to buy just one IP and keep it for ever and hope for luck, you need to look at RE as a business, this means try to understand the cycles and sell when you find better opportunities elsewhere: boom->sell->buy in another rising market. I would sell most of my properties in Sydney if I had any and buy something in Brisbane / Hobart. The question is: can I make more money if I sell and buy somewhere else or something else? This doesn`t mean you need to constantly buy and sell constantly.
     
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  14. MTR

    MTR Well-Known Member

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    Yes, you don't have to sell everything, the point is what makes sense?? reducing some debt, increasing cash flow, reducing risk... Its totally dependent on investors scenario.

    I don't have any fast, hard rule, for me its what makes sense at the time.

    If I sell down its because I have another project or another property that will turn over more money and I get to reduce debt. For me its not about the number of properties I own but how much cash flow I generate.

    It also has nothing whatsoever to do with age, I needed cash flow when I started investing and I still need cash flow today. I also am not huge on accessing equity to fund lifestyle, as this is just compounding debt.

    MTR:)
     
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  15. Perthguy

    Perthguy Well-Known Member

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    I have done it and it worked for me. A property was stopping me moving forward. I sold up, reduced debt and was able to take my next two steps because of it. It is working out well.
     
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  16. MTR

    MTR Well-Known Member

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    Bump.........Its OK to sell.... anyone selling/sold???

    I am always selling and buying, its like a revolving door.

    MTR:)
     
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  17. EN710

    EN710 Well-Known Member

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    Thinking of selling one of mine this year after some fix up. Will see how it goes :)
     
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  18. Sackie

    Sackie Well-Known Member

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    In the process of selling a place we have in Shanghai. Just last year alone we saw more than 30% Growth. Time to get out and realise the phenomenal gains.
     
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  19. Perthguy

    Perthguy Well-Known Member

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    I have not sold more but I do have an update on my last sale. The funds from that sale has now been used to move 2 projects forward that I would not have been able to fund without the sale.
     
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  20. skater

    skater Well-Known Member

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    Yep! Selling another. Just like you, it's a revolving door.
     
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