Sell or hold?

Viewing 4 posts - 1 through 4 (of 4 total)

trecolori
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@trecolori
Join Date: 2003
Post Count: 1
March 19, 2007 - 1:00 pm
Hi All,
I purchased my first property in 2003 at 160K, now I estimate its value to be at 170-175K. I’m a bit worried that maybe this asset is underperforming and I should cut my losses and start again. Any suggestions on how to calculate whether you are in a good position would be much appreciated.
Thanks,
T.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
March 19, 2007 - 1:51 pm
Thats a tought one. If you sell now you will incur costs and may even make a loss. And once you sell that area may go up in value and you could be kicking yourself.
What area is it in?
Terryw
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foundation
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Join Date: 2005
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March 19, 2007 - 8:55 pm
Originally posted by trecolori:
Hi All,
I purchased my first property in 2003 at 160K, now I estimate its value to be at 170-175K. I’m a bit worried that maybe this asset is underperforming
Underperforming? Many suburbs of Sydney and Melbourne have lost 10-15% since 2003! I’d say you’ve got an overachiever there!
Seriously, there are so many other factors to consider. Income, holding costs, location etc should all factor into the decision.
F. [cowboy2]
L.A Aussie
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Join Date: 2006
Post Count: 1,488
March 19, 2007 - 9:55 pm
I agree with F and Terry;
it is probably too soon to really tell. Maybe after 5 years you can gauge it better.
Historically, property averages around 7 – 10% per year cap growth, so after 5 years you should expect somewhere near 35 – 50% cap growth. Then you can re-assess and make a decision.
2003 was the top of the boom for many areas, so any growth since then if you are in cap cities is probably good, although, based on the purchase price I’m guessing it is not in a cap city. Regional areas and smaller towns can experience slower growth but better rent returns.
If the rent return is good I wouldn’t sell it just yet. If it doesn’t go in the next boom then maybe.
As Terry said; “where is it?”
Cheers,
Marc.
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