I thought yesterday’s Syndy Masterclass was fantastic. Unfortunately i had to leave to rescue my children before Steve’s last talk on the Business of Investing. Is anyone able to fill me on when is the time to sell property?
Liz
Hi Liz,
I was there. Here is my outake and some of my notes:
– If you have losses in your current portfolio, then fix it…fast! This all com under the concept of maximising your moneyThe big comment that Steve made that hit home to me re: selling, was the following 3 points:
1. Pay The Tax
2. Bank The Profit
3. Buy MoreBased on yesterdays session, my wife and I have devised a Sell solution for a poorly performing property we have in Melbourne.
Hope this is of use to you.
Regards,
BruceThanks for that Bruce- I was wondering if he elaborated anymore on a concept he mentioned briefly I think it was along the lines of – buy at 12% return and sell at 10% return
Liz
Hi Liz,
I was so glad to see a room full of like minded people.I think the main point is to reasearch the deals as much as possible without procrastinating.After seeing steve @ the reno kings in Brisbane and yesterday his greatest words are “TAKE MASSIVE ACTION NOW”
cheers
Mickm.wilson
Hi Liz
I was at the Masterclass and the bit you mention is where most of the people at my table started to come a bit unstuck. We all would have liked to spend more time going through this part. Our understanding is that the capital appreciation on the property leads to the lower rent yield, so for example if you pay $130,000 for a property, rent for $300 a week, that is 12% return. If you sell the property for $156,000, everything else being equal, ie rent is still $300 a week, the yield is now 10%. We may have looked at this a bit simplistically but that was the consensus at my table. Hope it helps a bit.Would like to hear from anyone else who was there as to whether they had a different understanding of this concept. A fabulous day.
jel
Hi Liz,
It’s important to cut any losses quickly – 2 reasons for this – mentally it allows you to realise the loss & get on with it , secondly it allows you to take the money as cash and get on with other investments. Steve talks about the velocity of money ( as does Robert Kyosaki) – you want the money to work for you & when it is tied up in a loss situation it is not working for you. romore Jel08
G’day all,
Yesterday was full on & full of great info. Re the rent yield ratio, our table also agreed with Jel08 & his table. The main idea was if you found a property with a higher yeild than whats happening in the same area, you should be able to sell it at the lower yeild, (what the average is for the area,) for a profit.Chally
Im with Jel08 and Chally – that was my understanding re: the implications of the Yield ratio’s. I sat down yesterday and went over the case studies, and whilst I get the calculations, what I don’t get is this…..
Up until now, through Steve’s 2 books I understood the Yield scenario to be be: “The higher the Yield, the better opportunity for positive cashflow”. To me, what he showed us is now the opposite and low Yields, drive up property prices. Im sure its not that simple and Im still working it through.
I do get it, but it’s just a change in my mindset of the need for improving Yields vs now, looking for lower Yields.Liz ,
My plan this week is to research my area to establish where the market is in regard to rental yield for a particular type of house i.e. my target property . the next step will be to look for the ” right proprty ” that I can use to create the positive cashflow we are all searching for . I thought it was a great day . GavThanks for all your help- it’s great to have a forum like this
Liz
The class was great, wasn’t it. This is my first post to a forum, hope I get it right! Page 66 of notes covered this question. Also, if you have purchased a problem and turned it into a solution then that would be a good time to sell. We bought a problem about 10 years ago and turned into into a solution. However, we hung on to it, and now it is a problem again! Time to turn it into a solution and offload.
From my memory of the Dec class, he was saying (in addition to the above) that as the yields drop you could sell a property to release funds and buy two more properties with higher yields (in a different area probaly) to replace them.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi All
Glad to hear a few others (Chally etc) were thinking along the same lines. And thanks Terryw for the additional info from December. It is a different way of looking at things but then again that was one of the points Steve was making – markets change and our thinking has to change with it.
cheers
jel
ps Chally, I’m a she!Hi Eliz,
I took from what Steve said, that the best time to sell property is when:
a) it reaches the point at which you’ve decided to sell! By that I think he meant that if you think that the market is going to trend sideways for a while (as lots of people do), and you have made a tidy profit, you might consider selling. An investor doesn’t just hold on… If you wanted to be more scientific about it, I guess you could look at the yield and work out how much it has fallen (because prices have risen). If your yield has reached a certain low point, this might indicate you should consider selling.
b) When you think you can get a better return from something else or another propertyHe mentioned having a ‘war chest’ a few times too – some cash for a time when property is cheaper or you can see something to take advantage of.
What I took from it, is that it has to be a personal decision, based on fact, (practical reasoning) rather than emotion (blind hope).
As usual, there is nothing written in stone. Reminds me of a school essay of the hardest kind – you need to take a principle and apply it to a particular situation (yours!).
What did other attendees think?
Liz
Also it’s not just about “finding” a property that has a better than the average yield in the area. You need to be able to see past the property and see the profit in the deal.
If you know that minor alterations can change the property, perhaps a small reno, and increase the property value or rental yield, then there may be greater profit in the deal rather than what the current property provides.
I was there on Sunday – it was fantastic! Though I have been continually re-reading my notes on this lesson to try and absorb it all.
Have you guys done your homework? I have! Grab the newspaper and crunch some numbers from the real estate adds. It may help you understand it better…
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