I have just read Steve’s 2nd book, and he seems to recommend selling properties and investing the profit into the next deal, partly to help reduce exposure. All our IP purchases so far have been based on loans of 110%, using the extensive equity in our PPOR first, then using the equity in IP’s due to cap growth. We thought it was best to use as much of OPM as possible. Can anyone explain Steve’s recommendation in more detail? Hope this is the right place to ask this question, as this is my first time on.
Hi Wake,
In some respects whether or not to sell will come back to the reason/s you invested in these particular properties and whether or not they are ‘doing the job’.
If you invested for growth (sounds like it from your thread) and the properties have grown and are likely to continue to do so over the long term then hang on. Don’t expect them to continue to achieve the growth of recent years in the short term – if they do see it as a bonus.
Peter Spann advocates selling if; the property is a dud, if someone gives you an offer too good to refuse, or if you have a better use for the money – as distinct from selling an investment to buy trinkets. Peter Spann also advocates a leapfrogging approach similar to the one you have been using with success.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Derek
Thanks.Hubby & I have jumped in the deep end and bought 10 IP since May 03 (2 -ve cf). Initially they were for buy & hold, and without a crystal ball our equity posn looks good for retirement in 10 yrs if we do nothing else. But our plans are changing and we want cashflow sooner so we can ease up on working, which means more of what Steve calls problem solving to create cashflow. Guess we might have to sell our 2 -ve IP as soon as we can pull a reasonable profit, to reinvest, since we can’t count on continuing excellent growth in the short term.
Wake
Hi Wake,
Understand where you are coming from but……
Are you able to access enough equity to secure additional loans if you sell your cf- IPs?
How many more cf+ properties are you going to need to achieve your goal of working less?
Is this feasible?It seems to me the 2 cf- properties are on track to do what you wanted them to do – it is just the fear that they will flat line for a few years has you spooked. There are ways of using the available equity to produce an income – see below where the subject was briefly touched on.
https://www.propertyinvesting.com/forum/topic/13094.html?SearchTerms=cashflow+from+equity
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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