澳洲Australia property Never Sell? | Sydney


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


I think that some people get caught up in the idea that they 'have' to have more and more properties untill they are up to thier eyeballs in debt, living a spartan existence and wondering how to get over the 'serviceability issue' or 'wall; that we all hit.

Or waiting until the next Property BOOM nto realise the fruits of their labours

Sometimes it seems you may be better served to take some of your profits, maybe cut loose an underperforming property or look at the advantages of adding value to your PPoR and selling it at a premium and moving into the next "doer upper" PPoR for the tax breaks, and once again adding value?

"Never Sell" it would seem, has it's limitations, both with property and shares/managed funds, sometimes it may be prudent to sell to realise a profit and move the monies into a better performing investment, selling and buying in costs considered


And as a topic for discussion...What do you think?

Never Sell?  

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Also depends on what you are buying.

A stack of cf+ could get you buy without the need to sell.

Low yielding rentals that have seen massive CG may need to be sold to realise any profits. The equity rich, cash poor scenario.  

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I think the " never sell" line is pushed a bit hard at times. The concept is simple enough.
Never sell because whatever you do sell will be worth more in the future.
While I think it's safe to say that yes they will be worth more.
There are too many variables for that one brush stroke to cover us all. Debt problems, family problems, health problems. All good valid reasons to sell.
Also better opportunities may be elsewhere.
I think it's more directed at the people that may spook easy in that large chunk of the cycle that dosnt boom ( like now). It's a bit of advice to ride out the short term storms and keep an eye on the end game.
But at the end of the day everyone is different. To hold or fold is up to the player.  

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redwing said: ↑
"Never Sell" it would seem, has it's limitations, both with property and shares/managed funds, sometimes it may be prudent to sell to realise a profit and move the monies into a better performing investment, selling and buying in costs considered


And as a topic for discussion...What do you think?

Never Sell?Click to expand...
Good topic, redwing.

I think some people may take the 'never sell buy and hold' literally and perhaps to extremes. Authors such as Jan Somers have written their books, I believe, to demonstrate what is possible by holding a residential property over long periods of time. However, there may be times when selling is necessary for lifestyle reasons or, to invest in better performing investments. (Eg moving capital from residential to commercial or shares to generate income).

There are also times in the economic cycle when property prices are stagnant and unlikely to rise for a number of years. Times like this make holding significantly negatively geared investments risky. Selling down in this instance may make sense. But then again, stage of life also plays a part in deciding when to hold and fold assets. Other factors that may influence an investor to keep holding investments is the amount of capital gains tax they may need to pay if they sell, and the cost of buying back into the market in the future. These costs are obviously very substantial with property as compared with shares.

I also think that investing within one's means also comes into play. I could never deprive my family of life's luxuries/necessities for the sake of holding a negatively geared investment. (Others can and have though - each to their own).

Regards Jason.  

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But then also being brave enough to cut loose the dogs.  

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Im with you mate.

Got to cut loose the dogs to get ahead. Bugger the Market timing, if you're gonna suffer or go bankrupt then just ditch it and re invest the cash elsewhere.

After all, you are meant to be investing for the lifestyle. If everything is on hiatus while you await the lifestyle......well, wasn't life meant to the the journey not the destination?  

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redwing said: ↑
I think that some people get caught up in the idea that they 'have' to have more and more properties untill they are up to thier eyeballs in debt, living a spartan existence and wondering how to get over the 'serviceability issue' or 'wall; that we all hit.

Or waiting until the next Property BOOM nto realise the fruits of their labours

Sometimes it seems you may be better served to take some of your profits, maybe cut loose an underperforming property or look at the advantages of adding value to your PPoR and selling it at a premium and moving into the next "doer upper" PPoR for the tax breaks, and once again adding value?

"Never Sell" it would seem, has it's limitations, both with property and shares/managed funds, sometimes it may be prudent to sell to realise a profit and move the monies into a better performing investment, selling and buying in costs considered


And as a topic for discussion...What do you think?

Never Sell?Click to expand...
totally 100% uniquivocally agree.

There is a fantastic chapter in Reminiscences of a Stock Operator:
Mr Turkey:

It's A Bull Market, You Know!
By Edwin Lefevre
Saturday, May 5, 2007


In Fullerton's, there were the usual crowd. All grades!


Well, there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered advice and never bragged of his winnings. He was a great hand for listening very attentively to the others. He did not seem very keen to get tips – that is, he never asked the talkers what they'd heard or what they knew. But when somebody gave him one he always thanked the tipster very politely. Sometimes he thanked the tipster again – when the tip turned out OK. But if it went wrong, he never whined, so that nobody could tell whether he followed it or let it slide by.

It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn't donating much to the firm in the way of commissions; at least not that anyone could see. His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast.

The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had not done with the tip so he would tell them what they ought to do. But whether the tip they had ways to buy or to sell, the old chap's answer was always the same.

The customer would finish the tale of his perplexity and then ask: "What do you think I ought to do?"

Old Turkey would **** his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, "You know, it's a bull market!"

Time and again I heard him say, "Well, this is a bull market, you know!" as though he were giving to you a priceless talisman wrapped up in a million-dollar accident-insurance policy. And, of course, I did not get his meaning.

One day a fellow named Elmer Harwood rushed into the office, wrote out an order, and gave it to the clerk. Then, he rushed over to where Mr. Partridge was listening politely to John Fanning's story of the time he overheard Keene give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he heard it.

Well, Elmer made for the old man and, without a word of apology to John Fanning, told Turkey, "Mr. Partridge, I have just sold my Climax Motors. My people say the market is entitled to a reaction and that I'll be able to buy it back cheaper. So you'd better do likewise. That is, if you've still got yours."

Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur, or gratuitous, tipster always thinks he owns the receiver of his tip body and soul, even before he knows how the tip is going to turn out.

"Yes, Mr. Harwood, I still have it. Of course!" said Turkey gratefully. It was nice of Elmer to think of the old chap.

"Well, now is the time to take your profit and get in again on the next dip," said Elmer, as if he had just made out the deposit slip for the old man. Failing to perceive enthusiastic gratitude in the beneficiary's face Elmer went on: "I have just sold every share I own!"

From his voice and manner you would have conservatively estimated it at ten thousand shares.

But Mr. Partridge shook his head regretfully and whined, "No! No! I can't do that!"

"What?' yelled Elmer.

"I simply can't!" said Mr. Partridge. He was in great trouble.

"Didn't I give you the tip to buy it?"

"You did, Mr. Harwood, and I am very grateful to you. Indeed, I am, sir. But"

"Hold on! Let me talk! And didn't that stock go up seven points in ten days? Didn't it?"

"It did, and I am much obliged to you, my dear boy. But I couldn't think of selling that stock."

"You couldn't?" asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers.

"No, I couldn't."

"Why not" And Elmer drew nearer.

"Why, this is a bull market!" The old fellow said it as though he had given a long and detailed explanation.

"That's all right," said Elmer, looking angry because of his disappointment. "I know this is a bull market as well as you do. But you'd better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself."

"My dear boy," said old Partridge, in great distress–"my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"

Elmer Harwood threw up his hands, shook his head and walked over to me to get sympathy: "Can you beat it?" he asked me in a stage whisper. "I ask you!"

I didn't say anything. So he went on: "I give him a tip on Climax Motors. He buys five hundred shares. He's got seven points' profit and I advise him to get out and buy 'em back on the reaction that's overdue even now. And what does he say when I tell him? He says if he sells he'll lose his job. What do you know about that?"

"I beg your pardon, Mr. Harwood; I didn't say I'd lose my job," cut in old Turkey. "I said I'd lose my position. And when you are as old as I am and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It's a bull market, you know." And he strutted away, leaving Elmer dazed.

What old Mr. Partridge said did not mean much to me until I began to think about my own numerous failures to make as much money as I ought to when I was so right on the general market. The more I studied the more I realized how wise that old chap was. He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me.

I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements – that is, not in reading the tape but in sizing up the entire market and its trend.  

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So here is the essential question:

Has the major upwards trend in residential gone into a sustainable lull or is it still a 'bull market'.

People who were just 'buy and hold' in the stock markets have learnt their lesson, is it time for residential property holders to learn that same lession.  

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In the same vein that people who don't want to sell hit an affordability ceiling, those who acquire enough property with rising equity and positive cashflow hit a "needs" ceiling (ie where the money coming in dwarfs what you need to be happy/comfy) - there does come a point where it makes perfect sense to take some profit even if you pay tax on that profit in order to consolidate or pay off the rest of the portfolio, so that you can spend some of that money on yourself/your lifestyle.

I've been around people since childhood (relatives) who never sold anything. In the 70s, they had 2 properties, worked 6 days, and their life was to go home, have a beer, watch tv, and go to sleep. In the 80s they had 10 properties, worked 6 days, and their life was still to go home, have a beer, watch tv, and go to sleep. In the 90s they had 14 properties, worked 6 days, and their life was still to go home, have a beer, watch tv, and go to sleep. Now they own everything outright, work 6 days, and their life is still to go home, have a beer, watch tv, and go to sleep. The only thing that changed were the figures in the bank, the stress of more properties, and the amount of time the accountant spent compiling everything.

I mean yeah sure it's great to have a few million bucks worth of paid off property and money pouring in sitting in a bank account, but the bottom line is that you hit your "needs" ceiling in the 80s, because the thing about beer and tv is that they're CHEAP. Should've taken profit, consolidated, and gone fishing. Spending a needless 20 years working 6 days so that you can feel warm and fuzzy about bigger numbers or leaving more to your kids who turned out to be rotten spoilt buggers anyway because you forgot that the whole point of having money is to live a better life is tragic.  

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The only thing that changed were the figures in the bank, the stress of more properties, and the amount of time the accountant spent compiling everything.Click to expand...

I reckon every poor, working or wealth aspiring person would agree with this.


However, I reckon every significantly wealthy person would disagree with this.  

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Dazz said: ↑
I reckon every poor, working or wealth aspiring person would agree with this.


However, I reckon every significantly wealthy person would disagree with this.Click to expand...
significantly wealthy people usually pay other people to stress for them :D  

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redwing said: ↑
"Never Sell" it would seem, has it's limitations, both with property and shares/managed funds, sometimes it may be prudent to sell to realise a profit and move the monies into a better performing investment, selling and buying in costs consideredClick to expand...
Agreed. Especially if you can use it to put money in better quality investments that appear cheap at the moment.

Consider this example.

Supposing you bought a unit in (say) a mining town at a yield of 9-10%. It's gone up in value a lot and yields are down to 6% or so. Management fees are a bit high and being remote you can't do much yourself to add value. The unit is cashflow positive but there's little land value component and being a unit there's no subdivision or development potential.

Meanwhile you find houses in an outer suburb much nearer home. Rental yields are low (5 or 6%) but management fees and council rates are lower. One of these houses is much cheaper than the mining town unit. And it's better value as you can get a house and land for not much more than the land itself sells on its own in a fringe estate further out.

So you sell the unit and buy 2 houses with the money. You might even have enough to buy one of those houses outright. Because of this low LVR the 2 houses as a package are CF positive. They are likely to be less volatile in value (because they're capital city, not mining town) and have higher capital growth potential (which in fact turns out to be the case).

Yes the agent and taxman get a cut, but sometimes it's OK to go back one step to go forward 2. And improve portfolio quality without compromising cashflow at the same time.

If there's clearly better opportunities around there's nothing wrong selling.  

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The first property I owned, the prices stayed the same for about 7 years. Yes I would consider selling if I thought prices would barely increase over a long period and the money may be put to better use.



http://www.somersoft.com/forums/showthread.php?t=41065&highlight=onthehouse&page=2  

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Sometimes u got to sell if someone offers u a crazy price and if prices are significantly less than the buyer is willing to pay. All this theory of just buying and not selling may not necessarily achievable for everyone  

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I'm still planning to never sell, primarily because I have a cashflow positive portfolio with plenty of future rent increases and CG in it (I believe). I also have plenty of time, and a high paying job, so no hassles or compromises with the holding.

That said, if circumstances change or something goes wrong, I'd be quite happy to re-evaluate my position and sell if need be. The wife actually pointed out to me on the weekend that if we sold one of our IPs in Braddon ACT and our PPOR we could buy the big house on the hill she likes that's for sale, and have no PPOR home loan. Hmmm.  

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paid off my PPOR in 2.5 years by having a combination of high yielding rentals and selling my PPOR and IPs - again it really depends on your lifestyle and what stage of life you are. You're not going to be selling ur PPOR if you have like 4 kids who are all schooling  

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Melbournian said: ↑
paid off my PPOR in 2.5 years by having a combination of high yielding rentals and selling my PPOR and IPs - again it really depends on your lifestyle and what stage of life you are. You're not going to be selling ur PPOR if you have like 4 kids who are all schoolingClick to expand...
I might be missing something?

You paid off your PPOR by selling it?  

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tom32 said: ↑
I might be missing something?

You paid off your PPOR by selling it?Click to expand...
selling the original PPOR to own the new PPOR outright perhaps  

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redwing said: ↑
"Never Sell" it would seem, has it's limitations, both with property and shares/managed funds, sometimes it may be prudent to sell to realise a profit and move the monies into a better performing investment, selling and buying in costs consideredClick to expand...
Absolutely.

My old man always used to suggest that when weighing up an investment decision, to ask a simple question of myself; "Does this action take me closer to, or further away from, my goals?"

The never-ever-sell theory will certainly see an investor pay a lot less CGT, agent fees and stamp duty. But, IMO, it is also rife with opportunity cost; selling a property makes perfect sense IF (and sometimes, that is a big 'if') we can identify a better place to invest the money.  

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Melbournian said: ↑
Sometimes u got to sell if someone offers u a crazy price and if prices are significantly less than the buyer is willing to pay. All this theory of just buying and not selling may not necessarily achievable for everyoneClick to expand...
Am I missing somethong too, u got to sell if prices are less than the buyer is willing to pay.  

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