Finally Selling My IP

Yeah the reasons are still the same - I'm not very confident about the future of the economy.

I know to most they feel that things have turned a corner, but from my perspective nothing has really changed, and I'm of the opinion that we just had 9 month bear market rally - I'm still expecting further debt based issues to constrain both the international and Australian markets going forward, and as such I don't think it is wise for me to have so much of my investment capital tied up in real estate.

Also since purchasing the property my opinion on capital growth being a part of an investment strategy have changed considerably (as in now I'm of the opinion it shouldn't be part of an investment strategy). Part of the reason we bought so close to the city despite the obviously higher prices was our feeling that these areas are most likely to achieve good levels of capital growth.

Plus since graduating uni last year and working more on my business I really feel like there are much better potentially uses of my capital at this stage that aren't dependant on international economics.

So my reasons for selling are a combination of changed outlook for the future, changed circumstance and a potentially better use of my capital in my own business.

That said, whilst my view of the Australian property market is bearish in aggregate, I think this property is a great IP, relatively speaking. Of course I don't believe it would be immune to a downturn (thus the reason I'm selling) but I'd be quite confident in saying that I'd expect it to outperform most IP's over 5 - 10 year time period - it just has so many things going for it. But I may be biased!

As mentioned above, the reason we went inner city was chasing capital growth. My investment partner is a property economist, and the figure and logic seem to support the theory for stronger capital growth as you get closer to the city due obviously to land restrictions, and in most cases land already being full exploited helping in the supply and demand equation.

As mentioned above I still have a bearish outlook, and personally have been quite relieved in the recent worldwide rally (LOL I guess that's why they call them "relief rallies") but from my perspective it is just a short term rally prior to further debt crisis.

If there is one thing I have learned in all of this, it is that the world move quite slowly, and whilst the writing may well be on the wall, that doesn't mean everyone has read it yet.

This is another massive thing I have learned through the process. Ironically in much tougher times we got better offers, 9 months later well most are predicting the glory days to return we aren't getting offers substantially less than we were. Which leads me to the conclusion, when it comes to selling property it's all about the right buyer for your property being in the market when you go to sell...

The guy we went with said as a rule he didn't negotiate on commission (I definitely tried), though both my investment partner and I specifically choose to go with him because he impressed us a lot in his ability to sell when we were looking to buy and he stuck out as one of the best agents we encountered in addition to the fact he had a great track record to back him up.

Which is another thing I have now learnt - having a great agent is irrelevant if once again the right buyers aren't in the market!

If nothing else, it has definitely been a good learning experience.

 

Hi Chris C

How did the auction go on February 17th?............as I'm pondering to sell my IP.

Cheers

 

It was passed in at $547,500.

Then came close to making a deal, with an offer of $590,000 - but the buyer ended going elsewhere as I tried to push for more money.

However we are now under contract for $609,000 and are going unconditional mid May, and settling late June - so fingers crossed it all plays out.

I guess the lesson here is good things come to those who wait, and that the best way to maximise price for a property sale is to wait for the right sort of buyer.

 

You have done well to get the latest offer of $609K considering you just bought the IP recently in Nov 08 for $540K. Compare to my IP where I have been stuck with little growth.

Best of luck as I hope “it all plays out” for you in June………..

You indicated in earlier post that you intend to use the capital in your own business. Just out of interest what line of business are you in? If you don’t mind me asking?

I’m taking “good things come to those who wait” approach to my IP at least for the time being.

Best of luck
2beducated

 

Yeah I'm quite grateful we have done well.

The ironic thing though is we got an offer for $590,000 in March 2009 that we knocked back, then a year later, was begging for an offer of $590,000.

Second lesson learned - don't be greedy.

At the end of the day I have my investment partner to thank, he is a smart guy, worked as a property economist, and just knew a hell of a lot more about property and what makes a valuable property than I did at the time (still does).

Third lesson - put yourself around smart people.

That said all in all I think on traditional investment property valuations $609K is still a good price for the buyer, as we have already received two applications for $610/week rent, and a third for $660/week (but they had a dog that wasn't allowed due to body corp) so like I said if you are bullish on Australian property I think the place is a screaming buy! But I could be biased.

Forth lesson - not everyone sees things the same way you do and that is what matters when it comes to price.

I don't mind you asking at all. I'm involved in Internet Marketing and Website Development and Management.

If you believe your position is justified and thyat it will just take time for others, or the market, to see it your way then by all means wait.

When I said good things come to those who wait, I meant it in the sense that, patience is a virtue if you are firm in your convictions.

So I (but more so my investment partner) had a lot of belief that the place was worth a hell of a lot more then the $547,500 it achieved at auction, and it's very easy to tell yourself that must be what it is worth because that is what it got at auction and a lot people will tell you that that is a good indication of market price.

 

Good news - the contract on my IP just went unconditional yesterday afternoon.

YAY!

*does happy dance*

Now that I'm out of the RE market I can finally really let rip about how boned I think it is without feeling like I'm undermining the sale of my property by pushing negative sentiment while I hold an IP asset.

 

Start a new thread and 'let her rip'. I'll put on the kettle.






Johny.

 

Wait you can let rip only now?

Congrats mate, did you get close to what you expected?

 

Chris, well done. congrats and all that.....

Your feelings will change as soon as you move out form your parent's place

 

LOL - All in good time.

That said, I normally need to be inspired by someone else's post before I can be bothered to engage in one of my traditional all out rants.

In the end we were reasonably happy with the result.

Now under contract for $609,000. Bought it for $537,500 in Nov 2008.

I have flown the coop a few times before and each time I come back (obviously). So I'm enjoying the home life for the time being and have no intentions of leaving.

If I move out again in the next couple of years I would almost certainly rent until such time as I felt the housing market offered significantly fairer value and I was ready to settle down more permanently, at which point I'd be looking to make sure I had at least a 50% deposit to purchase whatever home I wanted with the intention of paying the rest of the loan down as quickly as possible.

 

Chris,

I have adult kids still living with us. Nothing’s wrong with that. What I was trying to say that once you move out of your parents you will put all economic fundamentals and RE rationale aside as you will get very emotionally involved. You will not see a house as a house but more of the nest, were you and your family can call it home. finally, you will crumble under wife's pressure and you will do things against economic rationale to keep everyone happy.

I am not surprised that people are paying astronomical sums to get a roof over their head. It is not always cool thinking that pushes people to make financial decisions and RE is one of the markets based on people emotions rather than economic rationale.

So, odds are that you will soften your position once you move out.

 

Yes! Get Neil Jenman's FREE book 'Don't Sign Anything"...It is one of the most insightful books I've ever read on real estate. Check out his web site, and, no, I'm not connected with them in any way.

Good luck.

 

I've already sold the place. And I don't have any intentions of getting back into the market for many years.

 

Great, do you want to be my tenant? I'll do you a good price...

 

Will you cook, shop and iron for me like my mum?

 

haha you're funny
no but you can have a bottle of wine @ Xmas