Hi, Im new to this site,but Ive been investing for a few years now. Trouble is, like many, we opted for negative gearing. This has served us well till now but we’re starting to hit the ‘brick wall’ with finance as we now have 7 properties. Has anyone got some suggestions as to how to turn this around? We can renovate but rents arent improving that much to make positive cash flows from just this strategy. We could sell….or what do you suggest?
NikiHi Niki,
Thanks for your post!
Congrats on your success to date… 7 properties is a great effort, and hopefully you are now sitting on a large chunk of unrealsied capital gains.
I have a copuple of suggestions for you:
1. Make a plan
It seems to me that there may be an element of an ad hoc approach to your property investing. Has your portfolio grown as a result of a plan, or have you just bought based on an opportunity presenting itself?
In any event, it would be a good idea to make a plan outlining where you want to be in 5 years time and then go back and assess each property against that benchmark.
2. Profitability
A common problem I see with many investors is that they have not identified a minimum annual return on investment and as such just accept the result without a basis for comparison.
In your case, it will be difficult to know which property to sell (if any) if you haven’t tracked actual performance to budget expectations.
You don’t need to do anything difficult… just identify how much (in $) your property needs to make each year for you to be happy.
3. Consider selling
I would definitely consider selling as this does two things:
1. Recycles debt by repaying the current loan and allowing you to reborrow on another deal.
2. Releases unrealsied gains – lenders only usually lend up to 80% of unrealised profits, but selling allows you to access the full amount (after paying tax and sale costs)
3. The realised profit flows through to your tax return, increasing your servicability potential for other loans.
Naturally, I’d only sell if I could do better things with my money.
Hope this has helped. Thanks for being part of the community!
Merry Christmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
You might be able to sell the lowest/worst performer of the current 7 properties you own, and use that cash to buy a few CF+ properties, or depending on the current returns, put that money into securities or something that may have a little more growth. Still, Steve knows more than me, so probaly better to follow the millionare’s advice
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
Hi Niki and welcome,
If you are going to sell, then I dont think waiting will improve your success in doing so. Interest rates can only really go one way from here (and have already begun to rise overseas).
Once you work out your plan (whatever it is), I encourage you to take the jump and put it in action. As Steve often says, ‘Take a position on the market’, and act accordingly, rather than just drifting with the winds of change.
All the best with it
g1
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