I have $500,000.00 in my real estate
Accross 3 properties, one of them being primary residence.
I foresee that there will be possibly no growth or even decline in the market for the next 3-4 years.
Should I liquidate all my portfolio and do something else?
Or just retain it?
I thought the smart investors are the ones that buy in a buyer market and sell in a seller market?
You're getting it all wrong. Buy at the top, sell at the bottom.
Work out how much a market has to fall in order for you to buy in again and break even.
Factor in everything from selling costs to buying costs to stamp duty and capital gains tax implications.
Once you have done that, you will realise property has to fall quite a bit before you come out ahead by selling and buying again.
Of course if you plan to just liquidate and never buy property again, the above doesn't help you.
Where are the properties located and how much debt is there against them?
Everthing is in Melbourne VIC
Primary residence = Point Cook $550k loan Valued at $850k
Investment 1 = Werribee $330k Loan Valued at $450k
Investment 2 = Tarneit $330k Loan Valued at $450k
Both investment properties will pay it self off
Primary residence is costing me around 3.5k/month including rates etc.
Hold on to them property is always a winner buy more if anything ;)
bought in 2001 for 300k, Sold at 1.5m in march 2018…I'm still delirious..
Principal place of residence or investment? If former, where are you going to live? Rent for a while, buy a $3m place? Retire? ;)
If the latter, the government thanks you for your tax contribution!!
PPoR..
Moved to another house and paying "rent" to my Mother in law..
$$ are in diversified investments..tax is tax..only on income from investments and from working part time..loving it..
Well done sir.
Sell everything and purchase a Audi Dealership. Think of it as a high yield investment! Especially the return on those A4’s.
ummm…just pay off all your houses? $500k is chump change
Sell it all up! Market is off 10%! After a 20 year bull run of 10+% growth…
I read that after labor win the next election they're going to fix the housing market by removing negative gearing except for new builds and 1/2 the capital gains exemption I expect this will fix the market in pretty much the same way the pink batts scheme fixed the insulation market.
Yes they are going to grandfather the negative gearing but when you try and sell very few investors will want to touch your rental as it won't give them the same benefit as buying a new build so less interest and demand.
If you have owned the properties more than 12months and you sell before the changes on a $400k capital gain at the top tax rate you will pay about $100k after you will pay $150k so an extra $50K in tax
Accross 3 properties
Never heard of that suburb. Which city is it in?
OP - stop buying BMW X1's and $1800 watches…
Your worried about housing market staying flat or maybe going down 5-10% but buying heavily depreciating assets? That X1 has dropped 30% and will drop another 10% this year and next year - quick, sell!
As for your question? You need to provide more info on locations (state/suburb) of properties, equity in each, what your original plan was, negative/positive gearing, what you paid vs sell price now as there will be tax implications from CGT, wage information and capacity to service the loan as interest rates increase etc.
Without more info you are just going to get generic info and the people on hear who could genuinely offer some ideas/tips are being handcuffed by your lazy post lacking any real information.
lol is it apple xs max watch?
But the x1 is the budget BMW. Imagine how much he would have lost on a proper BMW such as an x5.
Accept that, as a property speculator, you're part of the problem. Regardless of your returns you should do the right thing and sell up the properties that are not your primary residence.
Yes Comrade, Yes!
When we reach true Communism, the shops will be full – there'll be butter, and meat, and sausage… It shall be glorious.
Nah, I'm more keen on free markets - unlike the distortion that policies introduce into the housing market through preferential tax treatment.
And for that to happen, the government will need to take drastic measures. Issue with this is, that too many people, including the one's that should not have property, have some, and the measures will prove so unpopular that whoever party is going to introduce the change won't be elected. And politics here in Australia is not about doing the right thing, it is about being re-elected.
Yeah, fixing the problem will be painful (and politically unpopular); it would have been better to prevent the problem in the first place, but that ship has sailed and now all paths are painful (not fixing the problem is painful, fixing the problem is painful in a different way).
If the properties are liquid(rich area), they will lose money.
If the properties are stable(poor area), the change will not be noticable +-1%
I agree. Property is extremely heterogeneous. Some properties will continue to grow despite a general 'bust' and some will never 'boom'. This 'all property moves together' mentality is stupid and out of sync with reality.
If you've got properties in Sydney or Melbourne I'd sell. If you've got Brisbane or Gold coast I'd hold. Not sure on Perth or Hobart.
Sell one and put into some ETFs (eg Vanguard). Hold on to them for 10+ years. Do your research on which ETF but it’s not there difficult..
pople will start buying crazy again when banks start lending money again ignoring your true borrowing power and prices will rise again.
I have a similar predicament. I have taken short positions through CFD trading accounts (IG, CMC markets, TradeDirect365) against anything that could be hurt by further declines in property. I have shorted the banks (though closed many of those positions after their falls due to the Royal Commission), Boral, Mirvac Group (who have a large residential property exposure) and am thinking of taking more shorts in Harvey Norman.
That way if my property values go down I make money on these CFDs.
Let's face it: property in Australia has become waaaay overvalued and has to come down considerably.
How have your shorts gone? I've been thinking about setting a few up myself.
About time we had this crash!
So far so good!
Are you diversified or are all your eggs in the real estate basket?
If so, I'd be selling and putting some into some other equities to manage your risk. Right now I'd say real estate in australia is at an extreme risk.
I'd assess your ability to hold. If the market went pear-shaped or something in your life occurred to reduce your income how comfortably could you continue to hold those properties?
If your life is set up so that being forced to sell at a later date is very remote I would recommend holding.
Most likely because of negative gearing the properties are not costing you a great deal at present, and the majority of the repayments are being made at no expense to yourself, building a nest-egg for the future.
If you sold you would likely have to take a discount on what you could sell for in the future, or a year ago, and would also be liable for capital gains cost, and if re-entering the market in the future, future stamp duty payments, as well of course as the costs of selling in agents fees.
Those costs combined could easily equal $100~$200k+ depending on the gains experienced so far.
Any other investment you could make would also have a downside risk - like seeing a share portfolio decrease by a similar or larger amount with potential to take just as long or longer to recover.
Because our politicians are very unlikely to stop selling out the country from underneath its Australian born citizens, & population growth will continue at very elevated levels it is unlikely property prices would fall for long. Sydney & Melbourne are going to be on The New York/San Francisco/London/Singapore/Hong Kong type price growth model until immigration is cut to a sensible level (which is very unlikely to happen).
Only if you could find it difficult to hold the properties with a change of circumstances and they are located in Melbourne & Sydney (which are likely to experience the sharpest temporary falls) would I consider selling now (and probably then look at re-investing some back into real-estate in the Perth market which has tended to be counter-cyclical to Sydney/Melbourne and where properties are creeping back into the bargain category).
sell now before it is to late. when you want to sell later, it will be to late and you definitely won't get as much as you are going to get right now. it will be like the florida bubble, and you cant even give it away later.
I read this report last night that compares what is happening in Sweden the last few years which apparently has similar housing/banking structure to Australia. http://www.eiml.com.au/images/general/Sweden_2.pdf
If your strategy is property then it's probably a long term strategy. And will probably utilize equity leveraging. If the property is in a good area and has good historic growth then consider how much it is going to cost you to liquidate and then possibly rebuy later. CGT and agent fees will probably highlight how little profit you will get back after you sold.
Then if you were to rebuy later, you have stamp duty costs, conveyancing etc. It is also very difficult to predict the market it there is a dip then you will find it will recover within a year or two unless we are facing economic meltdown like greece/Argentina (in which case you have bigger issues), and if you don't have to sell in the period of the downturn your no worse off. Also if you get your timing wrong and property prices increase whilst you are out of the market, you might find it very difficult to reenter the property market later on.
If you've got a good investment property, you'll usually do best you buy and hold then leverage equity to reinvest, as the entry/exit fees are prohibitively high. (The exception being flipping and redevelopment).
However if you have dud and you do not see good long term growth (10-20 years e.g. x2, x4 growth) (I.e. Flat regional market, mining town) then you may want to consider liquidating to get an investment grade asset.
Do you negative gear? Any interest only loans?
Nah honestly, sorry I don't care,…. I can't even pretend to help, OzBargainer or not, you're part of the problem.
Good luck, @#%! is going DOWN and it's about time.
Consider beating your real estate agent / spruiker / domain.com / family / tv for getting into it
This is just a beginning.
Sell all realestate and buy Bitcoin, Eth and Litecoin.
Dont know why your answer is neg. I would recommend this. Why? Because people are too focusing on capital gain, hope the properties will increase value next year, but it is just a hope. No one can predict the future.
There are heaps of ways to invest into the property and get positive cash flow on the first day.