Which Would you Pick

Discussion in 'Investment Strategy' started by MTR, 17th Aug, 2016.

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  1. Chris Au

    Chris Au Well-Known Member

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    That you're asking the question, possibly thinking option A?? (or maybe seeing what creative options fellow PC'ers come up with?).

    My risk adverse nature says option A - how much steam does Melb have in it? Better opportunities in other markets that are starting the rise?
     
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  2. Bran

    Bran Well-Known Member

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    :)
     
  3. MTR

    MTR Well-Known Member

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    .......so go hard, or go home...:)
     
  4. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Do you think taking the money and investing more in the USA will increase or decrease your stress levels?
    I only point this out as you mention that doing it from interstate is a potential stressor so I imagine that building in the USA would also be a potential stressor to you.
    So that's something to consider.
    Remember that the crystal ball of taking the money now and investing elsewhere (where ever that may be) just moves the stress point from A to B sometimes.
    I can totally see the lure of it, it's less return but less drama.
    How does it play out tax wise for you? Does that $200k get badly erroded in this situation by tax?
     
  5. Sackie

    Sackie Well-Known Member

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    For me its a no brainer. Develop it. Unless its really conflicting with your risk profile, otherwise I would develop that sucker. Market is still good, if the numbers look good in terms of return on TDC then its an easy decision for me, All comes back to your own risk profile. Also investing in overseas markets has its own set of risks.
     
  6. ellejay

    ellejay Well-Known Member

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    I wonder if you can also lose money by switching around too much. @MTR I think you said the townhouses in one of your developments saw a good increase after you sold. I know there were benefits in selling at the time, and I may be wrong but just wondering if you can lose out after costs by jumping too quickly from one project to another?
     
  7. MTR

    MTR Well-Known Member

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    Good point

    I am happy with 20%+ profit and reducing risk by selling OTP, locking in my money because market can turn. However your right could have made more $ if I sold on completion, perhaps I should take a bet each way, sell 2 OTP and 2 on completion. It's a matter of weighing up risk I guess, in terms of number of projects, $ value and whether there are signs that market conditions are changing
     
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  8. ellejay

    ellejay Well-Known Member

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    Agree, but re the market changing I reckon you've chosen locations very well. I wouldn't see market changing down as a significant risk for you but there equally could be an increase. Nice dilemma to have! I get the excitement of o/s, would be perfect to keep doing a bit of both but downscaled to capture a growth in both markets.
     
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  9. Cactus

    Cactus Well-Known Member

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    Also selling the dream is easier than delivering it. People don't realise how small it's going to be until it's built like you 6sq townhouse. Better to sell it of the plan. No holding costs on completion. No staging on completion. No time delay on completion. Well done.
     
  10. MTR

    MTR Well-Known Member

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    tempting
     
  11. Sackie

    Sackie Well-Known Member

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    @MTR your 2 otp 2 on completion seems like a good alternative.
     
  12. MTR

    MTR Well-Known Member

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    Also, I have been selling all my developments. Moving forward I will be possibly looking at holding 2 selling 2, but I change my mind regularly so don't hold to it:)
     
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  13. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    You need to sell one OTP, one on completion and hold one. :p
     
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  14. sanj

    sanj Well-Known Member Premium Member

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    What is the net after tax return for each option?
     
  15. MTR

    MTR Well-Known Member

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    Sanj
    about 200k net reviewing recent numbers and calc GST was wrong, as did not discount land

    I have changed my mind, I am going ahead with it because it's significant amount and dependent on market conditions I don't know when my next deve will come along in Australia. Markets are showing signs of slowing down.
     
    Last edited: 27th Aug, 2016
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  16. MTR

    MTR Well-Known Member

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    There will always be some stress at certain stages regardless ie sourcing loans, sourcing property, selling property, sourcing builders, risk etc etc. US stuff has actually been far easier to date

    At the end of the day it's either take the bull by the horn or do nothing... I guess I will go with it and make sure I take my medication:p
     
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  17. Tink

    Tink Well-Known Member

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    Bird in the hand in these tough times
     
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  18. MTR

    MTR Well-Known Member

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    If I was in Sydney totally would take the money and run, but I am not and there is not an oversupply at this stage in Melb of this product in the area I am building.

    I notice when I was developing 3 villas in Perth, in the middle of the project the market started going sideways, cooling off but it took at least another 12 months before some serious damage occurred.

    Also, in Melb market I have the option of selling OTP which is very handy, you don't get this option in Perth, buyers rarely buy my product this way.

    MTR:)
     
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  19. Speede

    Speede Well-Known Member

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    People are still making money in sydney.
    People will still make money in sydney while interest rates are low.

    But according 2 the Guru run from sydney!
     
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  20. MTR

    MTR Well-Known Member

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    Your probably right, but Syd West has most definitely slowed down, I am hearing that north Syd is doing well? not sure?? or still holding out, not sure about central coast? Perhaps others can confirm this who are on the ground??

    My point is that if you look at current indicators it is a market which is starting to cool off, the smart money are probably either selling, sold or have moved on, happy to be proven wrong. Lets review this at the end of the year. If buying in Syd now I think its certainly much higher risk proposition than 12 months ago

    In fact Melb is also slowing down, but there is still some steam, immigration is helping with this and I agree with you the lower interest rates are probably help both markets.

    MTR:)