Long-hold Land Lording Exit Strategies...

[Anita]

Dear All

We have been long hold residential IP investors/landlords, now aged, wanting to exit from properties & use proceedings from sales in FD to survive on interest for the remainder of our lives.




Our LTC is approx 15yrs old, consisting 50% properties bought over 10 yrs ago and 50% bought within last 5yrs.




The portfolio is generating decent positive cash flow and LVR is about 35%


It's time consuming & stressful to sell one by one or pair by pair through orthodox sale/auction process, hence we are looking options to sell all as a package, possibly. Looking ways to strategize the exit and do it in less cumbersome way. Appreciate your thoughts/suggestions on this,


1) Any landlords who has exited this way want to share their experiences ( if they still contribute to this blog



2) Can we sell this as a business & how ? Also what's the tax related issues, if such a deal happens.


3) Any suggestions, how/where can we sell them all ?

[Wayne]

You will get less for them if you sell them as a job lot or sell the 'business'.
You limit the number of people who can afford it.

[brendan]

Can you explain why you think it's time consuming & stressful to sell them one by one?

When my parents were selling up for their retirement, they sold them one by one as the wanted top dollar.

If selling them as a package, what discount over RV are you proposing? 20% maybe? Where are they located.

[Nick G]

Hi Anita

I think you'll get a higher price if you sold them individually however I can understand that seems intimidating. It is quite common for this to be done gradually and we have worked with clients in the past to do this in a way that makes it easy on them. We take care of everything.

I'll shoot you a message about our service. We have a large database on investors, most of whom would buy 1-2 properties at the most. We can make it a low hassle experience because by the time a client of ours views your property we usually have spoken with them, confirmed they have finance and the numbers work for them and have a contract in place or are close to it. Some vendors prefer us to market on TradeMe and run open homes etc, so we can do that also. I will contact you directly.

I just remembered I owe you a response for a question about an accountant, I'm sure its about the same question :-) Sorry about that.

Best
Nick

[JBM]

If you can't handle the stress of selling them employ a top local R.E and get them to do the work ....no harm putting the lot for sale on trademe etc ...you never know might well be an investor buy the lot without any major issues

[Rosco]

Hi Anita, Why not keep the rentals and live of the positive cashflow?

Or sell one or two , to make the rest of the portfolio provide better cashflow?

Ross

[PTILoveYou]

I would advice keeping the properties, because:
1) you could live till you are 100+ years old, property prices will increase overtime long term, but you won't profit from that if sell
2) you have passive income already, so why sell the golden goose?
3) FD, you mean term deposit in a bank??? your money will DEPRECIATE! Also next time you are in a bank, go to the counter and ask for $100,000 cash. See their reaction and how long it takes the bank to give you that cash! Money in the bank IS NOT CASH.
4) set up a family trust so you can pass on your golden goose to generations to come for your family (also great asset protection for your great grand kids with ever increasing divorce rate)

[lissie]

Tend to agree with Garry - if you are selling to live off income you will need to be investing in a share portfolio or similar to get inflation-proofed income. Putting money in the bank is crazy talk.

Also are you aware of the depreciation recovered tax implications - can add up to quite a lot particularly on the properties you've held for longer.

We've sold 7 properties over the last few years- it's not stressful at all - you list with a good local agent and sell when you get the price you want.

[Grads]

Sell some to reduce any stress! But use your properties to fund your income forever. I think if you sold up everything you would regret it. Redesign your portfolio so it's a hands off totally managed income stream with little / no risk.

[Connor]

I wouldn't sell all, I find it hard to see how you could get better income from bank deposit than by rearranging your portfolio. Sell those you find most troublesome or least productive, that way you can hedge your risks. You can sell any time but it's not certain that you can buy similar properties for the same price after you solf should you change your mind.

[Bobsyouruncle]

Anita almost all of us would advise to not sell as all the hard work is done. My advice if you were to consider keeping them is get a good PM if you don't have one and as you are happy with them give them a reasonable level of autonomy to maintain the properties for you. This will reduce some stress and allow the income to continue. Even if your overall return drops from let's say 12% to 9 you would be far, far better than FTD, especially in this current long term low interest environment.

HOWEVER if you insist on selling and don't want to sell individually your best bet is to talk to some of the people who sell to investors.
The ones I can think of on this forum are NickG, Puff, myself and Don Ha. I am sure others will make themselves known. You just have to understand you will realise maybe 5 to 20% less doing it this way but you may be fine with that.

One thing to consider, if you are going to put the money in the bank anyway consider providing some seller finance. This will give you a higher return than the bank and will help investors with the new deposit rules.

[Don't believe the Hype]

Anita almost all of us would advise to not sell as all the hard work is done. My advice if you were to consider keeping them is get a good PM if you don't have one and as you are happy with them give them a reasonable level of autonomy to maintain the properties for you. This will reduce some stress and allow the income to continue. Even if your overall return drops from let's say 12% to 9 you would be far, far better than FTD, especially in this current long term low interest environment.

HOWEVER if you insist on selling and don't want to sell individually your best bet is to talk to some of the people who sell to investors.
The ones I can think of on this forum are NickG, Puff, myself and Don Ha. I am sure others will make themselves known. You just have to understand you will realise maybe 5 to 20% less doing it this way but you may be fine with that.

One thing to consider, if you are going to put the money in the bank anyway consider providing some seller finance. This will give you a higher return than the bank and will help investors with the new deposit rules.

i second this... People in NZ are so much more reluctant to use a PM in other countries I've experienced it's rare not to use one... The value they add and the time saving alone is worth the fee!

only added input vs using the companies/businesses that sell to investors which as bob stated will likely result in a lower return to you... Find a good agent and let them put 1-2 on the market at a time.. Once one goes unconditional they list the next... Won't flood the market (assuming they're all I a similar location) and you should be able to attract a premium sales price.

@bobsyouruncle - I'm aware of NickG's company but haven't seen you mention yours before - what is the trading name of you're business? Is there a website?

[Bobsyouruncle]

Hype, no I don't advertise anymore. But I have a lot of investor clients in my database in NZ and several other countries who like to buy here. My main business is working with the poor in Fiji these days.