I have 2 investment properties in Perth WA (suburbs Pearsall and Hocking) which have produced significant profits due to the boom in the WA market in 2006 (30% capital growth) but now the market is flat with capital growth approximately 5%pa (guessing) and will probably be so for the next year or 3 due to affordability and low property yields to be made by investors in the Perth metropolitan areas.I am considering selling these properties and using the funds to invest in Queensland “hotspot areas” to increase potential capital gains hopefully to 15% pa (guessing) which may continue for a few years.I realize that exit and entry cost may be around 25k per property but in the long term this would in theory be absorbed by the increase in capital gains with more potential profit to pay for the wife’s shopping!What do you think? Opinions appreciated
Ettie
Well done for buy in Perth a getting signifiant gains due to rising market. I had a look at it 2 years ago and thought it was overheated. Obviously I was wrong.
I personally like the idea of getting out of Perth. Given it's capital growth in the past 3 years it would be hard to immagine that it will continue for the next 3 years (but hey I thought it was oveheated 2 years ago). If you maximise your sale price by targeting the house to a particular market and can enter another market at a reduced price by good negotiations then you may be able to mittigate the exit and entry costs.
With this said could you draw on the equity in the Perth properties and still fund a purchase or 2 in Queensland?
It depends if your personal investing philosophy is a buy and hold or one that looks to maximise returns.
Good luck with your decision.
Don
Hi Etty,
I agree with Don. You can use the equity from your WA properties to fund the deposits for your new IPs in QLD.Why not keep them and draw down against the large equity you have in these 2 IPs?
Me…I would not sell these at all in the near future unless you feel that you absolutely, positively cannot get by.Cheers
Hutch
Thanks for your comments,
I should have said that I have already used the equity in the perth properties and brought another investment property in queensland which is doing really well much better than the perth properties
This makes me think I should sell one or both of the perth properties and reinvest in queensland where there will probably better long term capital growthetty
Gday,
Where did you end up investing in QLD.
Jonathan
Etty,
Ride the winners; cut the losers as they say.
I see three winners there.
Use the equity and don't sell.
If you are confident that you have bought good properties, they won't go back in value (especially not back lower than you've paid).
Keep them, they will continue to grow in value, and go out and buy another the same as the last 3.
Trust your (very good) judgement.Townsville (mundingburra) and Redbank Plains (45 min south of Brisbane)
etty
The problem I see is the costs incurred when you buy and sell – let alone all the 'agro' involved.
I normally use a buy and hold strategy as properties generally double every seven to ten years.
However my motto is…..
'you will never go broke taking a profit'
Looks like I am having a bet each way but was trying to give you some options.
hi etty, i believe even if you have redrawn the equity it would still be a good idea to hold and wait to appreciate …well unless you need to cut loose because they're eatting to much into your pocket, good luck with your decision.
Don't forget U have to pay CGT. This will eat into your profits, I'd hold & use the equity to purchase others.
Good luck, Keep us informed
Geoff sunfortunately i am in the same situation,i did the webinar today ,our situation was the biggest talking point of the whole thing!!!!!! Most of the advice was to sell under performing assets rather than waiting for the market to turn,due to volatile interest rates .So if your skating to close to the edge , or feel the property has reached its potential,it may be time to move on……….I called my agent and dropped the price on one of my properties , it has been on the market for 8 mths,no offers, no increase in value in the forseable future so bye bye..cheers john……..
An interesting topic that I always want to know. I am new here. I am just considering this matter awhile ago. I have PPOR, 2 IPs. I am thinking to sell my 1st IP or to refinance it and invest another one. What do most investors do? I have lots of questions in my mine as I know many of you here have more than 5 properties!
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