Those who are selling - Why?

For those who have sold in this bull market (last month or so) I would like to know why? Forced to? Getting out of a suburb, to get in somewhere else?

 

I have one property I've never really liked, it's on a busy road. However there is potential for a developer to come knocking one day...I mean my neighbour is a townhouse complex after all. It stands to reason my property could be rezoned not long from now.

But otherwise everything else will be a long term hold for me.

 

I’m in process of selling PPOR.
I’m in a townhouse in a great suburb with a 15 month old and now WFH 3 days per week. Our company WFH now fully optional.

Simply want space.
Planning to move 10k further which should see me get double the space in land and house and save 100-200k mortgage.

 

Selling because (and only if) I get some fantastic prices. And it's likely. Also I have some good places to park the money to then earn me more.

I'm also only selling a small amount of my portfolio. In part it's also good risk management from my POV for my overall assets.

 

Most people I am working with at the minute who are selling are doing so to upgrade OO. That includes some selling IPs to fund bigger OOs.

 

Because it's a seller's market and can now pay off ppor.

 

Your plans for OO upgrade will be epic, I hear

 

For those that have sold out of fear/ panic or (pre-mature) greed without upgrading to another dwelling/ deploying funds into higher yielding opportunities would live to regret their pre-mature-ejection from the market!!

We have a very long way to go for the prop values and sharing a material % age of the gains with ATO (c25%) on account of cgt (for top tax bracket) would significantly erode their paper wealth.

Prop and long term being invested is the game of wonderful compounding through staying for multiple cycles but at a very minimum, not dropping the pants and running for the hills at the very start of a super boom cycle! That is not investment - it is trading/ speculating!

Disclosure - I am selling 4 TH out of my multiple developments which are almost finished (and 100% of proceeds going to ato for tax owed from 2019) but holding 90% of stock for the long haul.

 

Problem is, now or down the track, you'll have to cop CGT. Holding will result in more equity but proportionately more tax.

Plus if one can't refinance or cash out, the only way to enjoy the spoils is to sell.

 

Should tick a few boxes, but must be said they are not my plans
I just get the money approved

 

Prop price - $1m SD -$50k
Cost base $1.05m

Prop sold (start of boom) - $2m.
Selling costs - $50k.

Cost base - $1.1m
Gross CG - $1m
Net CG - $900k
CGT - ~ $245k
After tax gain - $655k

Adding 25% more growth during the cycle:

Cost base $1.1m
Sell price - $2.5m
Net CG - $1.4m
CGT ~$336k
After tax gain - $1.064m

Almost 60% higher net gain (even after tax) if (as we are expecting there is a very significant probability of this prop cycle carrying for 12 months) .

Again, I understand the 'taking profit' and that jazz but it is too early in the cycle. If someone is willing to pay 25% premium to 3 months ago and we expect cycle to carry on (even slowing down), they are likely to pay significantly more in 6 months.

Losing 25% growth in a cycle amplifies the net losses (absence of gains) to over 60%!

All numbers are general (didnt double check) and just to highlight the dangers of jumping off too early..

 

The underlying assumption in this thread is that prices will continue to climb substantially.

It could well happen but it could just as likely go the other way if interest rates climb, people can leave the country again or an increase of available stock flips it more in the buyers favour than currently.

 

Understand all those - but we all make investment decisions based on the probability of an event occurring.

For 'serious' investors who can assess the opportunities, the probability of any of the headwinds are the lowest, they have ever been in prop game (or lowest I have ever seen) and the probability of this boom continuing on is the highest- for all the reasons highlighted by all & sundry.

Never been more certainty around IR, consumer & business confidence, growth in employment, business activity, auction clearance rates the fact that this is being lead by OO & FHB, high lending standards.

Add to the fact that the earliest growth spurt has been the fastest in 35 years (since early 80s) tells me the momentum has just started to generate.

Yes, crap can hit the fan but the overwhelming probability (90%+) is that this will carry on for the rest of this year at a minimum.

Even if we reduce that probability say from 90% to 50% and turn almost bearish on the forecast, even then the fact that we are letting go of 60% additional after tax gain by panicking is letting go of a lot of pot cap gain.

There is no one who is forecasting that prop prices will go in reverse this year. There might be those who think that they might slow down. So in absence of that, it is even more risky to jump the boat this early and lose future cap growth.

 

Half my circle are now able to work remotely FT and are looking at NZ, US or rural moves.
The other half are just as hell bent on a city buy

Will be interesting to see what happens when borders open, IR increases and immigration flows again. Crazy times

 

Sold PPOR (settlement was 3 weeks ago) and reduced debt by 75%.

Property portfolio is now cashflow positive to the tune of $50,000 pa

 

congrats on the sale.
Given it was your PPOR, did you buy a new place or just planning to retire on your super yacht?

 

Our Super doesn’t own a yacht, only shares .

We have downsized in our unit on the GC which we bought 5 years ago. Its value has boomed since then, especially the last 6 to 12 months.

 

Probably also depends on which market you are in. If the suburb/street is now under water you probably wish you had sold last month.

People will be returning to offices, will this take sting out of places like sunshine coast.

 

Crickets from me. Didnt do the maths. Just shot from the hip.