When Crazy Becomes the new High

Discussion in 'Investment Strategy' started by MTR, 15th Sep, 2016.

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  1. Barny

    Barny Well-Known Member

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    Cool, that's a good sale then. If I sold up now and the price went up another 100k. I wouldn't be upset. I'd be happy with what I've made and what it's allowed me to continue making.
     
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  2. MTR

    MTR Well-Known Member

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    I have learnt sometimes its a good idea to take the money and run, you don't go broke taking a profit.
     
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  3. Azazel

    Azazel Well-Known Member

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    That's the ticket. If you make a profit you're happy with, get out at a good time and put your money to good use, you shouldn't worry about what it sells for again later.
     
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  4. MTR

    MTR Well-Known Member

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    Selling OTP a good strategy to reduce risk, especially if market had been going hard as has Melb
     
  5. Redwing

    Redwing Well-Known Member

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    When Crazy Becomes “The New Normal”

    Sane.JPG
     
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  6. sanj

    sanj Well-Known Member Premium Member

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    Realise this post is a few weeks old but based on the numbers you're talking about it wouldn't even be a tough decisions
    300k is nowhere near enough to justify the extta risk, time etc when you coild walk away with over $1m now, get 50% cgt and then decide what to do.

    300k for a 6 townhouse development at end value of 3.6m is less than 10% profit . If that's what the market is willing to pay it's often the sign a very top heavy market is in play and people are developing units based on estimated future capitall growth and not actual profits. Better off letting some idiot develop it for those dollars

    Have you accounted for fact that your profit after development woulf be taxed differently to selling now?
     
  7. Barny

    Barny Well-Known Member

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    Yeah since the post I've had contact with one of the accountants, not my usual accountant as he's on holidays. But it seems the tax structure I wasn't aware of will change affecting end profits, but I need to confirm with my accountant when he's back.
    I was advised this will be considered a business and thus there will be no 50% discount applied. and Secondly there will be GST implications involved as well which will mean that 10% of the proceeds for the completed buildings will be paid in GST.

    So on this advice that was given, would change everything and it seems selling as is would be best, but will confirm.

    300k doesn't seem much on overall profit and high risk, but when comparing all those times you bend over backwards to create a small return from a little subdivision or gaining capital growth from other properties in the portfolio over the years and then 300k seems like a lot, which it is, but still a big risk.
     
  8. MTR

    MTR Well-Known Member

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    Risk vs Reward and ROI all need to be considered.

    For me personally I find risk with developing high, and I have seen many developers getting the timing wrong and instead of making money they actually lose money, or have to hold development sites and need deep pockets for this.
     

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