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Need a simple way to evaluate my Portfolio

Discussion in 'General Property Chat' started by Bigmaan, 11th Jun, 2016.

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  1. Bigmaan

    Bigmaan Active Member

    Joined:
    19th Jun, 2015
    Posts:
    26
    Location:
    Sydney
    Hello All

    I have 5 investment properties across QLD, NSW, SA. Some I have held for 10 years. With rents dropping, costs rising and markets slowing I need to have a realistic look at them. In a nutshell :

    • All are negative geared properties with interest only loans .
    • Apart from Townsville all have grown reasonable well with Caddens excellent.
    • I own my PPOR fully

    How is the best way to look whether I have a lemon, whether I keep it longer or try and move it on in next year or so. The obvious way is Market Value - Purchase Price = profit or loss. I subscribe to your investment property and buy reports from hotspotting and the like. I try and keep on top of the forum and the smart people investing here.

    Is there a better way to look at them. For the record I hold in :

    • Douglas ( Townsville )
    • Bellbird park ( Ipswich )
    • Burton ( south Australia )
    • Medowie ( NSW )
    • Caddens ( NSW )

    Any advice is greatly appreciated..... I can afford to continue to hold them for next 5-10 years but am I missing out on something else because I am almost maxed out.

    Thank You.
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Gold Coast

    Maxxed because ?

    ta
    rolf
     
  3. Bigmaan

    Bigmaan Active Member

    Joined:
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    Borrowing capacity is maxed out according to my lender. Maybe off load a dud or two and go again ?
     
  4. Azazel

    Azazel Well-Known Member

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    How long have you had each one?
    Townsville will pick up again, just a matter of how long.
     
  5. MsAli

    MsAli Well-Known Member Premium Member

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    @Bigmaan - the lending environments have changed in the last 12-18 months.

    When you say your lender - do you mean one lender? Have you looked at various lenders? When building a portfolio, I'd look at various lenders to make sure you can maximise your borrowings (of course within your risk profile).

    In excel, figure out the capital growth each of your properties has seen over the time they were purchased.

    Did you buy them off the plan / brand new? Those command a premium and therefore much less growth than an established property.

    Also what are you trying to achieve with this portfolio? I like the keep it simple and stupid approach of:
    1) buy at the bottom (best possible return i.e. 7%+ historically in a number of the Sydney & Brisbane areas i.e. positive cashflow) or in a market poised to rise (diminishing yet decent enough return i.e. neutral cashflow)
    2) buying established vanilla properties in well located areas with government & private spending and hence gentrification of the area

    That way whether you buy $1m or you buy $3m of a gross portfolio, you know that it can sustain itself AND when the market grows, it grows with the market. 10% on $3m is $300k, 80% on 3m is $2,400,000 capital growth.

    So my questions to you would be:
    - what sort of capital growth has happened on each of your IP's?
    - what sort of growth has happened on your overall portfolio?
    - is this growth in line with the overall area growth (look at pricefinder or residex reports for this)

    What has been your approach with your purchasing?
     
    Last edited: 11th Jun, 2016
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  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Possibly not.

    I find many that have equity can still do more than is obvious with a lender or broker.

    Sometimes though, as mentioned in the diversified lending thread.............

    Diversified Lending Structure (how to maximise your borrowing capacity)

    ..............selling down,and rebuilding the house of cards with some glue can take one further.

    Thats where "end goal" modelling can be a useful tool, no point selling stock only to find we cant buy again

    ta

    rolf
     
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  7. Beano

    Beano Well-Known Member

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    Are these residential or commercial?
    (If commercial what is tge net yield and walt)
    What are the details of your overseas properties (if any)?
     
  8. Ted Varrick

    Ted Varrick Well-Known Member

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    Something to consider as you evaluate each property:-

    1. Is it losing money?

    2. Is the capital growth bigger than the cash loss?

    3. Is the capital loss causing possible LVR pain?

    4. Should you keep it or sell it (after evaluating the possible capital and revenue implications)?

    5. See point 1.
     
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