Hi All,
In Steve’s books he advocates mutiplication by division, or in other words, sell a property for profit, and use the profit to purchase more investments.
However Robert Kiyosaki and Peter Spann are more interested in holding on to their investments and borrowing against the equity in order to ‘leapfrog’ and purchase more property, providing you can service your loans.
While I can see the logic in Steve’s ideas, I tend to agree more with Kiyosaki and Spann. Why would you sell a property if it’s creating cash flow and or increasing in value?
Just wondered what you thought and what the pro’s and con’s of each scenario might be.
Thanks,
Ian
Hi Ian,
What if it’s in a depressed market where the property will possibly go down in value?
What if interest rates are on the rise?
What if you’ve had all the capital gain that you forsee for the next few years?
In these circumstances, could it not be smarter to use your “profits” rather than 100% finance?
In a rising market things are different.
Nobody is right and nobody is wrong, they are just different strategies.
Del
I should have read ‘Steady’s’ topic before posting this one.
What if it’s in a depressed market where the property will possibly go down in value?What if interest rates are on the rise?
Wilandel, pardon my ignorance, but if this was the case, what would happen to your loans that had equity redrawn from them?
It probably depends on where and what you are buying.
If you were buying cheap little properties in country areas, these may have not had any growth for many years. Then suddenly investors start buying in there for yields. This pushes up the price but rents hardly increase. This probably is the time to exit this market. it would be no good hanging on to these if there could be long terms with no CG potential.
If you are buying quality properties in good growth areas, then I agree that it is not a good idea to sell – generally.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
In the end it is all a numbers game. The numbers may work out better selling.
Of course selling and buying again does cost you CGT and agent fees and bank fees and lawyer fees and stamp duty etc. So the perceived benefit needs to be large enough to counter that.
Maybe if you have a ‘problem child’ property it might be better to get rid of it as well.
Andrew
http://www.rentmaster.co.nz
Software for Landlords
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