Hi All,
I have 5 IPs and I am selling all of them because they moved from being CF+ to CF- in the last year.
Brisbane market is overvalued and I think I can get a better deal somewhere else even after selling costs.
George
George,
Can I enquire as to how the properties went from +CF to -CF?Apologies if this seems a naive question, but I always assumed that CF+ properties mean’t that the rent coming in covered pretty much all expenses and holding costs. If the properties already belonged to you and the income has in the past covered the expenses, how do they suddenly all become CF-.
Overvaluation of property should not affect CF once purchased.
Granted, selling in an over valued market is a great way to realise a capital gain for other projects, but I am still trying to come to grips with CF+ properties and am wondering how a property can become CF-.
The only way I see it is if:
1] interest payments have gone up (unlikely as the rates haven’t really been raised recently)
2] rent has dropped.
3] increase in costs due to tenant damage?
4] a loss of depreciation allowancesIn all these cases, there is nothing to do with an overvalued market, but rather related to each individual property.
So, if it’s not too much of a bother, could you explain your statement a little more?
Thanks
lupus
Hello selling, I’m in Brisbanes south side and I’m hunting around for some properties for my father inlaw,
I already have 6 ip’s but the banks have no more for now for me.
Could you please send me a private message as to there where abouts and price, and are they listed with an agent yet. I assume this is why you have told us. Also I know the Logan area like the back of my hand.Thanks, I look forward to hearing from you.
Lupus 1704.
Selling obviously means the properties are now cash flow negative on current values rather that purchase price. Nothing wrong with that. For example, a Sydney property that was purchased in 1960 could be returning a yield of 40% on purchase price. It may only have a rental yield of 3% on current values. It’s overvalued.
Maybe he wants to put the cash into blue chip shares, get 5% fully franked yields, and growth as well.
Good luck.
Ever considered moving forward i9n your new venture whilst keeping (some) of your properties?
If they have been working for you so far, why sell (all)?Also, you “state” your plans without explanaition, why? You just wanted us to know or …
Erik
Erik Reurts
Micah Finance Solutions
http://www.micah.com.auWild One, the banks wont let you purchase more property? What is up with that?
Matt R (Gold Coast)
hi wild one
look at private lenders the rate is very similar and the don’t have the same criteria.
as for selling all in brisbane I would stagnate sales and vender finance people to buy.here to help
Hi I read Steve’s book over a year ago, and read the electronic stuff all the time. But I haven’t done anything about it .. we still have a mortgage and 2 neg grd properties. Also I have started working for myself (left the corporate world).
Am scared of positive cash flow – even though I know the rationale behind it. Also am not sure how to approach it – everytime I do the figures on something in Brisbane, it never works out like Steve’s book examples!! That is – favourable!!
I am not sure why George is selling – I wouldn’t, so I must not have this down pat after all.
Any one able to give me a big oush in the right direction??
Alice
Hi Matt,
I just recently purchase my 7th. property with the help of a very good mortgage broker. My problem is not my LVR but my DSR. My debt servise ratio is over the top as my income is not huge. Not only that I didn’t have to pay any tax last year as I got all my $10,500 worth back.
So it also becomes very difficult to find cf props because no one gets any more tax back than what they’ve paid.I have to fing positive gear props if I’m to proceed further. Everybody complains that they can’t find any cf’s how would they then be able to fing positive geared ones. But it’s not over in a long shot it will only take for my rents to go up $10 may be $15 so that I may be able to continue my journey. The way I see it is the more properties one has the easier it becomes, eg. 10 properties a $5 increas in rent is more than enough for another purchase.
The other problem I have is my wife wants to leave her part time job.[weird]Originally posted by jah:Hi I read Steve’s book over a year ago, and read the electronic stuff all the time. But I haven’t done anything about it .. we still have a mortgage and 2 neg grd properties. Also I have started working for myself (left the corporate world).
Am scared of positive cash flow – even though I know the rationale behind it. Also am not sure how to approach it – everytime I do the figures on something in Brisbane, it never works out like Steve’s book examples!! That is – favourable!!
I am not sure why George is selling – I wouldn’t, so I must not have this down pat after all.
Any one able to give me a big oush in the right direction??
Alice
Hi Jah,
I personally believe that Steve is making more money from selling books and seminars than from the property market
clones
I totally agree with clones all this crap about buing for the right price then turning it into positive cash flow is all bull. Everything out there is over priced to start with I have been looking for 9 months even have agents looking for me .I reckon Steve is laughing all the way to the bank from the book sales and seminars. He even wants to know how much we are prepared to pay in a year to be taught. LOL
Originally posted by lupus1704:George,
Can I enquire as to how the properties went from +CF to -CF?Apologies if this seems a naive question, but I always assumed that CF+ properties mean’t that the rent coming in covered pretty much all expenses and holding costs. If the properties already belonged to you and the income has in the past covered the expenses, how do they suddenly all become CF-.
Overvaluation of property should not affect CF once purchased.
Granted, selling in an over valued market is a great way to realise a capital gain for other projects, but I am still trying to come to grips with CF+ properties and am wondering how a property can become CF-.
The only way I see it is if:
1] interest payments have gone up (unlikely as the rates haven’t really been raised recently)
2] rent has dropped.
3] increase in costs due to tenant damage?
4] a loss of depreciation allowancesIn all these cases, there is nothing to do with an overvalued market, but rather related to each individual property.
So, if it’s not too much of a bother, could you explain your statement a little more?
Thanks
lupus
Hi guys,
Well, my propertieswen from CF+ to CF- because of:
1) Interest rates up
2) Vacancy rates upI did a valuation of my properties 3 months ago and after all the hussle and property stress I am making a poor 4.5%. I better get my money in the bank for 4 or 5 years and get back to properties after that.
One thing I have learn in many years is that you should sell when you are making a profit and avoid being greedy to try to keep something that is not really working or is not working very well.
George
You’re getting 4.5% + Capital Gains. Sounds a bit better than sitting in a bank for 4-5 years.
If its overpriced, and you’re not in it for the long term, yeah sell. But if you are in for the long term, (and assuming that you do have equity in the places, why not borrow as much as you can on these overpriced properties and buy what it is that you would like to buy in the current market. And with your new CF+ purchases invest the funds back into the CF-‘s to bring them back to CF+ positions.Or if you are really worried about being CF- sell 1 and use the funds to bring the others back to being CF+.
Mal
Getting out of your comfort zone, can help you become comfortable
Hi George,
I too sold off 4 IPs in the Brisbane area this year. I did this to reduce my LVR and the amount of debt and to cash in some CG. I will have a big tax bill for 04/05.
You want to sell because they have moved to -ve cash flow, if you are prepared to give the figures on all props then some wizards on this forun may be able to give some suggestion on making them +ve, or other suggestions on what to do.
hrm
I just bought a place in Brisbane and am looking for more.
Overvalued? how so?
http://www.posigear.8k.com
Positive Geared Share InvestingSelling
I’m curious. When you first decided that you wanted to accumulate investment properties, were you planning on holding onto to them long term or was it more a case of getting in and riding the rising market???
Far be it from me or anyone to criticise your decision, however if you had the idea of holding onto these properties for the long term, cutting now is a brave option. If its the later then given the state of the Brissie market, then maybe youre getting out at the right time.
Eric
Crashy
You did well to find a property in Brisbane that fits with Steve’s definitions – or am I doing the sums wrong?
Can some clever wizard help me on this?? Home value $750,000 mortgage $350,000. Inv P No 1 value $350,000 mortgage $169,000. Half of another Invet P value $175,000 mortgage $70,000. Our gross income – $190,000.
Would I be able to borrow any more money – can’t see how myself. Also partner not willing to go further – which drew me to this forum in the first place!!
JAH
Hi Jah,
All dependig on what you are investing i and what ou are trying to acheive you can invest more, maybe one of the financier on this forum can tell you how much you can borrow after looking at your situation closer.
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.au1 down 4 to go. I am very happy because people are still buying with this high prices [biggrin]
I strongly believe that buying cheap and selling high is marvelous. CF+ is just an addition.
George
Hi George,
That is good mate. I completely agree with you, if the market is overprice and people are willing to buy, start selling!!!.
Property is not only about buying and holding, it is about buying and selling when you can get a good profit, otherwise hold.
Clones
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