Hi guys,

Thank you all for your comments. I was always a believer of holding assets for the long term,  but am now a believer in taking a profit after reading Steve's latest book. I have made significant equity on this investment since acquiring it in Aug 05, and am doubtful whether there is any further value add opportunity. I have assessed the strata title unit scenario, but the asset is worth more selling it as a high yielding investment. I am thinking if I hold it I will have to rely on capital growth to further increase equity, and I think there is more equity to be made in the market employing other value add strategies.

Essentially I have looked at the best return on the $310k equity I can release. If this $310k equity sits in my home loan it saves me 7% interest p.a. ($21,700). I would effectively have to earn 14% on this $310k equity pre-tax to equal the scenario of having the $310k in my PPoR mortgage. The $19k p.a. cash flow I receive by leaving the $310k equity in the investment is only a 6% return pre tax. This analysis obviously doesn't account for any capital growth in the asset, but I am now doubting any future capital growth as it is essentially a secondary location (positioned on a busy main road).

I also looked at the scenario of pulling out equity to fund another asset, but the next deal I want to do will be on a larger scale. By sticking to an LVR of 80%, I worked out I will have more money for a deposit by selling the current investment than if I redraw some equity. Accordingly, I think I will take the offer of $750k and pay down some debt on my PPoR. That way I am cashed up to look for another value add opportunity to create more equity. I think you reach a point where you have to back yourself to be able to find another opportunity.

Thanks again everyone for  your input. It certainly has made me rethink my strategy for the next 5 years.

Cheers,
Jayco