Selling 2 of my IP's - looks like a loss is coming

Agree. Good buy and hold property investing is actually quite boring and uneventful.

 

Oh dear

 

I am always for offloading lemons if this is what you have and make your money work for you today

I have the view that property is about timing the market not time in the market.

 

That is exactly what we are planning to do to our IP plus knock down 2 x freestanding walls to revert the house back to DLUG.

Also thinking of adding a tandem carport on western side ending up with 3 or 4 car accommodation plus keep house cooler in summer.

Spend around $50K, increase value by $100K.

 

Even better for one net worth if one doesn’t buy lemons in the first place .

It isn’t that hard to avoid them ...

 

for sure, I consider a lemon a property that is not performing, growing in value. Why I say timing is everything

Seems many ignore most important factor..... market conditions

Many buy at peak, seems common

Some talk about what area to buy in Melb today??? With no consideration to the cycle and economy.

Markets within markets, but no point buying when market is starting to trend down, easiest way to lose money

For example there were at least 4 boom cycles in Oz since 2013, imagine if you jumped into these 4 cycles..... happy days. But what happened if you ignored the rising trend and jumped into a flat or falling market..... ouch

 

TBH, the property market is a lot easier to pick than the sharemarket.

I have a share whose total return was for 18 months (1-Jul-18 to 31-Dec-19) was +3%.

Pretty bloody awful and I was seriously thinking about selling it. I started thinking I had bought a lemon.

Then COVID started to rear its ugly head. This calendar year (nearly 8 months) that same share has produced a total return of +65% including the COVID crash. COVID turned my lemon into lemonade.

Go figure!!! Imagine if I had sold those shares .

In my experience, winners in property are a lot, lot easier to pick and way more forgiving than shares.

I feel it is best to develop a strategy (after appropriate eduction and research) and stick with it, give it time, ... even though floodwaters might come one’s way. Beautiful sunshine always follow violent storms.

 

If you sell these 2 properties where are considering buying? Are the properties cash flow positive? What was your strategy when you purchased them 4 years ago?

 

What if these properties are impacting their ability to borrow any more? Combined with the outlook that these properties are unlikely to grow, wouldn't it be better to sell?

 

Very good point you make

In current climate the ability to borrow ???

 

And even the most faithful and true believers yield to temptation of selling.

A real example: The owner was selling his property as frustrated by the low b&h growth. If not due to an extremely uncooperative tenant and one from hell ruining the place such that no prospective buyer wanted to venture beyond the front door, the property would have sold in 2006. The property grew 4 times at its height and it is still 3 times+ during the Covid.

 

Who's borrowing?

I have "batten down the hatches" until the end of the world has passed .

 

This leads me to think about debit and serviceability issues for one and second timing the market. I would smash down the debt and build up equity in the meantime and hold on for a bit longer. I would also rethink my strategy as maybe it is all a bit of a learning experience? Can I get more yield? Rent out rooms, build a granny flat...I don't know ....something like this. Timing the market never seems to work with share trading as you can't trade from the right-hand side of the chart. What will it feel like if in two or three years you stalk this property and find out it's gone up. Lastly, if you change strategies so quickly, maybe assess if something different is for you perhaps as far as investment style goes. Many leverage to the hilt on 90% ratios thinking they can just leapfrog from place to place but if this doesn't work? What was the backup plan and margin of safety?

 

In my experience when I was a novice, every property I sold (only a couple) and stalked always increased in value.

Property stalking is not good for one's confidence and mental health.

 

Ha ha. Really my pep talk post is me talking to myself. I've definitely made some rookie mistakes I'm trying to work my way out of and continue to self educate every day here. Property is waaay more forgiving than share trade errors as always a way to wangle out

 

Trading shares may be very different to property, and far more risk???

One way to time market with property is only buy when stock shrinks and demand is greater than supply.

Boom markets generally last at least 2 years. You can never time it perfectly but as long as you get in the early stages.
some markets now are seeing stock tighten Lower end, however covid adds a layer of risk, not sure I would jump in. How our economy goes over next 12 months will the clincher I think

No fun servicing debt if markets are going backwards

euro73 raises some interesting points regarding financing, his a mortgage broker

Not sure whether you are aware of lending changes in Australia regarding interest only loans

 

I learnt about 20 years ago that I was not the trading genius I thought I was. The only shares I buy now are socking 15% to super every year

Yes It's a bit like doing fundamental analysis and using technicals to time the trade. See I know the fancy talk, I just don't know how to do it well. But I learned what I was rubbish at

Yeah euro73 is sorta my hero as far as smash down debit. To that end my IPs there went P&I several years ago and I hope to own both outright in 7 years then see what is the next best play.

Thanks for the reply - an honor. Sorry if im crashing the OPs thread. I hope cautionary tales like I am are helping the guy out

 

Rhetorical question or not - borrowing here.

Not quite the famous quote - but It’s time to buy when others are fearful etc etc.

 

They don't cost much to hold, but both properties are hindering my borrowing power sadly.

 

It's more about getting out of both properties to put my cash in faster moving investment strategies