Real Estate Sell Down

@Propin, seems we may be similar ages... and have adult kids too. Also am very happy how my portfolio did so far.
But I still am interested to find out how different human minds work, why we make the choices or decision we make, I do get it we have different circumstances and we are all different.

 

Yep, definetly poor. And yes, I have no interest in money only what it can do for me.
Never was interested in being a high taxed corporate shill. And even less in feeding the bankers.

 

Let me give you guys a hypothetical scenario fictional amounts:

20yo want to be an RE tycoon and buys a resi property for 100k in outer suburbs.
It's fairly big property with lots of expenses, some easements and what many would describe as tons of potential future dramas.
He thinks the burbs are just going to get bigger and sees huge potential, not soon but in 20yrs time as the suburb of Sheetsville grows as did many other burbs and history will hopefully repeat itself.

By luck turns out Sheetsville does indeed grow lots after 20 years and now 40yo Tycoon wants to play Monopoly and replace the house with a hotel.
Unfortunately council puts up many obsticles to whatever is propsed, everything and anything is very difficult, will take much consulting etc.
He's also advised by many (some even experts) to sell as RE is going down and a few low ball offers are made.
Tycoon just thinks watevs things are going in the right direction, except expenses and a jump in rates and taxes.

Close to the 30 year mark Tycoon realizes that the house should be changed for 2 hotels.
Pays the fees (lots) and gets an approval from council for 2 nice red hotels.
Building red hotels will need lots of upfront capital and begging banks for money.
At 50 and not looking for drama he decides to sell. And so he sells for 2.5m
After paying taxes and expenses, champaign and cigars and dancing girls, he is left with only 2m.

This 2m = 66k net per year for the next 30 yrs, if he lives to 80 (though he'll live to 101).
Many of his friends are making much more than that, though they're older and still doing 60hr+ work weeks. The younger friends that are doing well he hasn't seen for a long time, understandibly they doing great and must keep working like slaves cause they're financially free.

Ex Tycoon deicded that he was happier being poor and had to make do with the lemons he was given by fate.


How many people do you know with a 60k or more net after tax at 50?
Remember the big fuss about living on LOCs years ago? Anyone actually doing that?
What about the old "sell one house every year or two" and live on the proceeds?

As for the Forex, well I played with it over the years and it was good.
It's just another crazy idea. Some people like video games, others play golf, I play forex.
How many thousands have you, your family or friends spent on hobbies like golf? Your kids on video games? (I won't mention makeup and shoes...) And how much would it be after 30yrs at 8% compound?

Yeah, I was told I could do something sensible like buy a Subway or other franchise, pay others to do the work and rake in the cash...but i ain't buying that.

I'm still invested in RE, but just trying to live the dream.

 

What will Caboolture look like in 30yrs time?

Will it look like this or different?


And an example. Low yield, high expenses probably not much more than break even over the years.
GREAT ACREAGE FAMILY HOME!! ON 3575 M2 OF LAND

Of course i have done no research on this, just for illustrative purposes

 

Where there is a lot of surrounding land future releases tend to dilute the land values, so time will tell.
Hence why I sold Ormeau IP, too much land around there like in Caboolture IMHO, and constant new stages/releases of new land developments limited high CG+ for the future. Obviously it depends what investment strategy others use...?

 

In my experience that hasn't been the case.
And it's still not the case from what's been happening in 2650 and places like Oran Park, Harrington Grove etc. Hundreds of acres over the last few years.

 

After looking at resi properties for sale in the Brisbane areas I hear and feel the call of the RE sirens..... shhhhh go away!


So many development opportunities, and 10% or more return on deposit.
Looking at cheaper end of units in the city i see the same prices as 10-12 years ago. It's like a time warp.
The outer also seem like deja-vu from times that apparently we long gone.
Fees and expenses are a little higher, but interest is half.

Lock may be affecting investments by keeping interstate elopers out of te market.

 

The RE Sirens was there since 2017. Several of us predicted and it didn’t happen, some started to exit early 2020. Now it looks more promising. Let us see...

 

As I mentioned depends whether there are new releases say every few years or decade or so, not just lots of land surrounding it.
Ormeau has not performed to my benchmark expectations and that suburb has new releases and still more land for future releases.

 

I remember thinking that Ormeau was in a growth corridor around 10-12 yrs ago.
I was like "perfect place for growth". Funds were utilized elswhere though.
Looked again a few days ago and you're right, for some reason not much has happened.
Maybe next 10-20yrs.

 

Sold it some time ago, if you own many, you can disregard some sour lemons, right?

 

Absolutely. If you can allocate to better pastures, all the better.
So much of the market is outside buyers so this virus lockdown may slow it all down by 5-10 years.

 

My mum was recently nagging me to meet with a young couple who needed some advice on building some wealth. In order to do my mum a favour I decided to have coffee with them. Cutting a long story short, they wanted to build $3mil in net worth via real estate in " 5 to 7 years, ideally closer to 5" she said so eagerly as I listened on sipping my latte. They so far had saved up 45k together. They were adamant whatever I told them, it had to be within that timeframe.

I knew I'd regret going.

 

Agree, extremely hard to mentor and guide as we are all different.
I can tell you of two such similar incidences few years back though. I go about it in a different way, I wish to see what desire, drive is there first. So I direct them to read only couple of books and then to answer for themselves but to me, two questions.
Guess what....I think 5 years or so have passed and am still waiting for them to read and answer those two questions (something along what $ amount you wish to achieve from property investing and what property investing strategy will you follow).
So as the saying goes, "you can bring a horse to water but you cannot force it do drink".
IMHO, DESIRE/HUNGER/OBSSESSION/GOALS/DREAMS (whatever you wish to label this!) is MOST important than anything in life, and I guess you and I realize that now. As our JR said, "If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse."

 

I agree. Either it's there or it can be developed by individuals themselves. But It can never be taught.

 

Hence why I always say that if someone will invent such a course to create a DESIRE I will be the first one to buy it, hasn't happened to date.

 

Well it's all going to plan and the settlements will soon start coming in.
Market is fairly strong, plenty buyers with money paying highest prices.

On the other side I'm looking at a CIP development that could be interesting and fairly profitable.
Def not retail, more on the industrial / logistics side. I have some tenants interested before I even start. They have certain issues and if I can provide a solution, they may go for it.
Build + land is around 2-3mil, finished value around 5. I'm just gonna see how this plays out.
More details to come if I move forward on this.

 

We've started selling off IP's & living off the profits until the pension kicks in - sold 2 IP's in the last 4 years.
We're pretty frugal people who live modestly & we've been living off nearly pension type money for a few years now - with the occasional splurge.
This was our original plan & so far we're sticking to it & it's working.
Reckon you can't take it with you & the kids have been brought up around all that we've done & have their heads screwed on - so they won't need much inheritance.

I semi-retired at 46 after a couple health problems & have spent the last 12 years doing the odd reno on any new property we purchased - wife retired 3 years ago. Currently in the middle of a reno on the first IP we ever bought which is fully paid for. We've splashed out on a caravan & travel around free-camping for months on end ^ plan to do that almost full-time for the next 5+ years while we're still able to.

One thing I've learned is that your health can go anytime.....so don't wait until it's too late to use all that cash you've spent a decent part of your life accumulating.

 

Over the past year I have come to hate residential properties. Tenants are driving me crazy. They take a property in immaculate condition and return it dirty, damaged and unrentable. Besides that, the returns are very low and make it not worth it.

My plan is to strategically sell down all my residential real estate holdings over time and invest in commercial property instead. The return is much higher and the tenants stay for much longer and pay outgoings.

And before everyone jumps in and tells me to get a property manager, I haven't actually met a property manager in Perth who has read the residential tenancy legislation. I have and I understand it. I have taken tenants to the tribunal and won, something many PMs in Perth struggle to do. My point is that I should not have to take tenants to court because they were too inconsiderate to clean a house before they left. And yes, I paid so called property managers big dollars to vet the tenants before taking them on. I am over it!

 

I actually sold our IP in Perth once the mining boom was coming off and so glad I made that decision, even looking now the price would just revert to its top price but no boom price like other IPs in SYD or BRI, rents went then down too.
Also looking ahead only iron ore keeps WA Perth going, just my opinion, for my personal liking, hence do not plan to invest there as too much uncertainty with China and this export remains.
Unfortunately markets in AUS are fragmented so not all is doing well and economies in certain states can change too.
I don't know much about commercial so I stay away from it but agree it is less hassles than in residential.
I do get it where you are coming from though...!