To sell or not to sell - that is the question

[Gerrard]

Yesterday I received an updated valuation one one of our properties. Assuming the valuation is within the ballpark of reality, we could sell this property and pay off our personal home loan. The nett result would be a saving/benefit to us of $10k a year (i.e. less money we have to pay out of our pocket for the home loan).

Our investing goals are based around living for today, knowing the futue is secure. If we sold the property we could do more living for today, but are taking away from the future being secure. Interesting dilemma!

On the live for today side we could use the $10k pa for more holidays, work 1 day a week less, a holiday house, etc. However in the scheme of it, $10k pa doesn't radically change our lives so why not keep this property knowing the income stream it will produce in the future?

Who else has thought about this "problem", and what swayed the decision for you?

Gerrard

[Julian]

Sounds like your investing goals are vague. Goals should be SMART, that is: specific, measureable, achievable, realistic and time defined. Having such goals will make it easier to decide. Does selling now move you towards or away from your goals?

Remember that the actions you have taken in the past have delivered you to where you are today, so that means that today is tomorrow's past. Picture yourself in a few years time looking back on the decision you are about to make and imagine how you might feel about it.

Best wishes with your decision.

Julian

[PC]

Have you talked to a lawyer/accountant about legitimate ways of accessing your rentals equity to pay off your home loan?

eg sell it to a company.

[Gerrard]

Hi Julian - yes - our investing goals are SMART. The reason we have investing goals so we can live for today knowing the financial future is secure.

We could still meet our investing goals if we sold this property, we'd simply be a bit behind as at today, so would have pick up the pace.

Remember that the actions you have taken in the past have delivered you to where you are today, so that means that today is tomorrow's past. Picture yourself in a few years time looking back on the decision you are about to make and imagine how you might feel about it.

Great tip - thanks.


PC - yes have investigated ligit ways of accessing investment equity to pay off home loan. This has been factored into my calculations. So the 10k is the difference between such and option and selling.

Keep the ideas coming!
Gerrard

[Dean@Massiveaction]

Hi Gerard, have to agree with Julian. You r goals are not clearly defined enough or you would be able to answer this question. How you utilise your equity will be totally determined by your specific goals over the next X years. Think a bit more specifically about what passive income you want. When do you want to retire etc.etc. That will help you make the decision

[wavelengths]

gerrard
A 'wealthy' friend of mine tells me he has NEVER sold any property without later regretting the decision. Make of that what you will. Best of luck.

[Tempo]

What a thought-provoking comment!

I am thinking of even some of the duds that I have got rid of over the years. Would I still want them today? You have got me thinking.

If you can keep a property and it is not going to drain you, then I think that, yes, perhaps, you should always keep it.

Instead of a holiday, read some more books, go for some more walks, make lots of love lots more often.

Tempo

[Gerrard]

Well I've finally got it figured out. I've spent a few days doing the numbers and projections and trying to consider all the angles. Every way I looked at it said sell, reduce debt, and there would be a $10k benefit year on year in interest savings.

But then I realised I had forgotten one of the cornerstones of property investment - LEVERAGE. By leveraging the equity for further investments I can generate much MUCH more than $10k benefit each year.

Duh! Can't believe I missed something so obvious.

Gerrard

[wavelengths]

i suppose that supports the 'never sell' ethos.
good luck.
gary

[Gerrard]

Yep - pretty much. I can still imagine situations where it is desirable to sell (e.g. to fund some lifestyle changes or to get an immediate benefit) but if you have the time to wait, it's reasonable to expect value and returns will continue to rise over the long term.

Gerrard