Never, ever, ever sell ...... a reflection by a Perth investor

Discussion in 'Investor Stories & Showcase' started by jaydee, 23rd Nov, 2020.

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  1. jaydee

    jaydee Well-Known Member

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    Never sell. This was one of the many mantras I adopted early in my property investing years.

    Forgive me if I reminiscence……………………………

    I used to think that I loved property, however, I soon realised it wasn’t the actual properties that I loved, it was the process of accumulating them and growing equity through holding them that was the buzz. The wheeling and dealing, renovating and growing wealth far quicker than working and saving.

    Obtaining an initial LOC for $50K, then another and then a much larger one for a total in the multiple $Ms was a goal to achieve. The first million of debt was a little scary, but after that it was just a number.

    Buying properties with cash offers (with LOCs in place) was magic pre 2008! Okay, interest rates were much higher, but money was readily available. With an LOC in place, one could buy a property (and all associated costs) for cash and then subsequently put a mortgage in place that paid down the LOC.

    As a Perthite, travelling to Qld on a buying mission in 2007 was so much fun! (Ask Rixter)!) Perth prices were over the top and Brisbane properties seemed so cheap by comparison it was a veritable smorgasboard, and we were hungry!

    Attending property seminars in Perth, Sydney and Melbourne was also fun and highly motivating. Not to mention all the like-minded people one met along the way. Not all turned out so well (ie. Navra) and some even took a while to pay dividends (Metropole) but they were all good learning experiences.

    My first property investing book was “The Negative Gearing Guide” by Stuart Laidlaw (c 1998). This really opened my eyes and then of course Jan Somers and a every other property author that has been mentioned on this forum.

    Property investing is actually short periods of excitement punctuated by long periods of mundane inactivity.

    There have been big crashes and long plateaus, but property if bought correctly is still a good investment.

    Property investing had allowed me to give up my day job in my mid-forties utilising LOE. Admittedly, I did go back into part time work for another 11 years (with gaps between contracts), but it was much more enjoyable (and profitable) as it was then completely on my terms. LOE then kicked back in again when I eventually finished paid work several years ago. (Before all the naysayers jump in, LOE can work if you set yourself up for it well in advance with large LOCs.)

    Anyway, plans change, life moves on and as part of my revised retirement strategy, I am slowly selling down my property portfolio (one in each FY to reduce CGT). As one of my tenants has recently given notice of vacating, I am now planning to sell this particular property.

    So why would I sell? I simply say this Leederville property has served me well but it is now time to move it on and utilise the funds in other ways.

    So is this the property being sold a bargain?…… Probably not. But will this be priced well and an opportunity? Definitely yes!

    So back on topic, “Never” is forever, but life doesn’t always work that way.
     
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  2. Lacrim

    Lacrim Well-Known Member

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    Thanks for sharing. Are you selling to release more equity because the LOC's are depleted/depleting?
     
  3. datto

    datto Well-Known Member

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    Sell to diversify!
     
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  4. jaydee

    jaydee Well-Known Member

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    No, Still heaps of availability in the LOCs. Selling is a personal decision and I will use the funds in other ways.

    One thing that always make me laugh is that someone that has zero equity and minimal income will be able to get a new loan easier, even though I may have several million in equity because they have job-related income.

    I'm not complaining, it is merely an observation.
     
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  5. spoon

    spoon Well-Known Member

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    That is the reason I keep my day job! it’s easier to convince the bank that you can repay your loans by showing them the payslip than showing them the titles of your properties. :D
     
  6. Lacrim

    Lacrim Well-Known Member

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    I'm surprised the LOC's lasted that long - either your living expenses are modest or the LOCs are massive (or both). Do you have a paid off PPOR?
     
  7. jaydee

    jaydee Well-Known Member

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    Not sure how to answer?

    Yes, PPOR was paid off and was security for all the LOCs. LOCs are still in place but hardly used these days. Living expenses were reasonable (2 kids were in private schools but now young adults and independent). Credit card debt always automatically cleared. Bought whatever we needed and liked. I guess if it was needed it was a given but if it was a luxury it was considered and may or may not have been bought.

    Definitely have never wanted for something.

    Best lesson early in life: stretch yourself to buy the best PPOR that you can afford and then pay it down.
     
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  8. Lacrim

    Lacrim Well-Known Member

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    Agree with this
     
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  9. Jana

    Jana Well-Known Member

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    I second this.
     
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  10. db9

    db9 Well-Known Member

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    Very cool, thanks for the share :)
     
  11. kierank

    kierank Well-Known Member

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    Corrected. Land appreciates, buildings depreciate.
     
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  12. jaydee

    jaydee Well-Known Member

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    Block size may or may not be relevant.

    I will rephrase:

    Best lesson early in life: stretch yourself to buy the best PPOR in the best area that you can afford and then pay it down.
     
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  13. kierank

    kierank Well-Known Member

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    For me, that is a given when buying a PPOR.

    I would never buy a PPOR in a crappy area.
     
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  14. moridog

    moridog Well-Known Member

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    I was thinking of this the other day. When I bought my PPOR ( a long time ago) there were three houses in my price bracket and chosen area. Two were on good nick on small blocks and the third was in poor repair on what I considered a medium sized block and that’s the one I bought. Suffice to say that medium sized block is now considered large and I’ve been able to demolish that crappy house and build a new one. Not clever, just lucked in.
     
  15. Omnidragon

    Omnidragon Well-Known Member

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    Nothing wrong with selling properties. You could be doing it for lifestyle choice. You could also do it for investment choice. Some of our best family properties have been obtained by selling a few small flats to stump up the final deposit for a behemoth of a deal (did 8-9x in 15-20 years). Some of my own best properties have been selling underperforming ones and getting into fast growth ones. Over the same period the one I sold was flat and the new one I bought tripled.
     
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  16. MTR

    MTR Well-Known Member

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    Curious, do you keep in contact with Rixter, I believe he moved to Melb, no longer posts here
     
  17. jaydee

    jaydee Well-Known Member

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    MTR, I had to check my archives, I think my last emails with Rixter (Rick) were in 2013. Probably around the time he moved to Melbourne. We are/were very different in our approaches to IPs, but I sure did admire the analytical approach and amount of resources he always had and shared freely.
     
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  18. MTR

    MTR Well-Known Member

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    Thx For sharing
    This is a good read

    I think your strategy worked well as you diversified, other States. This is massive, imagine if all your properties were in Perth???
     
    Last edited: 13th Dec, 2020
  19. Beano

    Beano Well-Known Member

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    Would you ever sell if you owned this investment ? Or is this a investment you would hold for ever and ever ?
    The land that is
    The rent review is every 7 years, no maintenance , no insurance ,no rates , no land tax (as in NZ) just a big income tax bill :p


    Owners of the Scene One apartments face a 136% ground rent rise
    Apartment owners on leasehold land in Auckland’s CBD are facing ground rental increases of as much as 186%, following the latest review by the landowner.
     
    Last edited: 14th Dec, 2020
  20. traveller

    traveller Member

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    Not sure why this is the case.

    Will it not better to be most aggressive in buying investment properties (or other financial investments) and minimising PPOR expenses?
     

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