But why compare cost with current values? If you're a property investor just buy them and forget about it?
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I still think you need to review, and consider is this investment still working for you. Calculating Gross Yields on current values is a good way of comparing rents vs value across all properties. This is obviously only a part of the equation.
I agree if a good property in good area, then it probably is still a good investment, but worthwhile going through the exercise. I think if you have 10 properties, you probably have 1 bad property that is under performing and your overall portfolio can be improved by selling it and reinvesting in something better. An example of this practice is dairy farming and culling. Farmers kill off cows that are under performing and replace with new stock. The old cows are still producing milk, but just not as good as new ones could.
As a comment above mentions, it does depend on the investor, their aims, goals etc.
Bluecoat - you mentioned earlier that a reason not to do the change was that you are changing from a 7.5%(existing ) to a 3.6%(new) gross yield. I don't believe this gives a fair comparison. As if you swap, your rent is likely to be the same, your mortgage is likely to be the same, and your overall cashflow is likely to be the same.
RossBook a free chat here
Ross Barnett - Property Accountant
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I agree sort of but the analogy doesn't really work. Even supposedly poor assets will generally perform over time. That's the awesome thing about real estate. a friend recently nearly sold a "lemon" after holding it for many years. After rents finally moved in the town and it got some well overdue growth he now wouldn't part with it for love nor money.
I believe the whole point of investment is to get to a point where you can forget about it and get on with your life. Focusing your life on investment is just sad :-).
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Originally posted by Bobsyouruncle View PostBut why compare cost with current values? If you're a property investor just buy them and forget about it?
He is trying to reconcile the yield of the old and new.
He also said
Originally posted by Bluecoat View PostOnly problem is the price has doubled from the time I purchased it so unless I can sell mine close to this, might not be worthwhile. Yield on my PP is 7.5%
Buying the new one and keeping both may have some strategic value - maybe the 3rd will come on the market and he will have all 3.
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Originally posted by Bobsyouruncle View PostI agree sort of but the analogy doesn't really work. Even supposedly poor assets will generally perform over time. That's the awesome thing about real estate. a friend recently nearly sold a "lemon" after holding it for many years. After rents finally moved in the town and it got some well overdue growth he now wouldn't part with it for love nor money.
I believe the whole point of investment is to get to a point where you can forget about it and get on with your life. Focusing your life on investment is just sad :-).
* productive defined as meeting your current investing goals/objectives
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Well if I had held Huntly I would now be laughing yes, it is unbelievably actually starting to go off. But that was a non performing asset with years of issues. Not the case with Bluecoat's situation.
In my case, except for 2 houses I had in Otara that were nightmares I pretty much regret selling everything I have ever sold. Especially the first 20 or so homes in Auckland. Hindsight, oh wonderful hindsight.
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Originally posted by Bobsyouruncle View PostWell if I had held Huntly I would now be laughing yes, it is unbelievably actually starting to go off. But that was a non performing asset with years of issues. Not the case with Bluecoat's situation.
In my case, except for 2 houses I had in Otara that were nightmares I pretty much regret selling everything I have ever sold. Especially the first 20 or so homes in Auckland. Hindsight, oh wonderful hindsight.
FH
FH"DEBT BECOMES IRRELEVANT WITH INFLATION".
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Hi Bluecoat
Have you had any issues with it? Whats the yield on it?
If you haven't had any issues with it and you have a higher yield that the new one I would be inclined to keep it.....is there anyway you can purchase it and retain the current one?
Hope that helpsFraser Wilkinson
www.managemyrental.co.nz
Wellington / Lower Hutt / Upper Hutt / Porirua
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Originally posted by FJW View PostHi Bluecoat
Have you had any issues with it? Whats the yield on it?
If you haven't had any issues with it and you have a higher yield that the new one I would be inclined to keep it.....is there anyway you can purchase it and retain the current one?
Hope that helps
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He's a serial offender - has been doing it for months. Often even resurrecting a dead-and-buried thread to do it.
It would certainly put me off using his services as a PM, were I an investor in his area.My blog. From personal experience.
http://statehousinginnz.wordpress.com/
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