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Please polish up your Crystal Balls.

Discussion in 'General Investing Discussion' started by Simon, 4th May, 2007.

  1. Simon

    Simon Well-Known Member

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    We have just settled on a block of land in a quiet ttree lined st in a nice middle class suburb which we know well. We plan on building a decent home that will serve as our PPOR for the next phase of our lives - poss 10 years whilst we have teen kids at home.

    We have been trying to sell our current home to fund the building but we haven't had much success. We have a standing offer which is lower than we want.

    I figure we have a choice.

    1. Accept the offer, move into a rental property (with a dog :eek: ), use the proceeds to build and move in on completion.

    2. Sell my share portfolio to fund construction, stay where we are until completion then move in and put our current home back on the market. When the building is completed I will borrow to purchase a large portfolio of equities and managed funds.

    It all hinges on the market I guess. I need to decide on which asset would serve me better over the next 12 months and which would realise a higher gain in that time.

    It would certainly involve less removals and family disruption to stay in this home until it is completed.

    Any thoughts or experiences that may help decide?

    Funny enough the process of typing this has helped to crystalise my thoughts but I would still enjoy your ideas.

    Thanks
     
  2. Glebe

    Glebe Well-Known Member

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    What sort of capital gains hit would you be looking at?

    Navra units don't go too bad if you need to sell, because there isn't much capital gain.. but if you've got CBA @ $5 from back in the early 90's and WOW etc etc...
     
  3. Simon

    Simon Well-Known Member

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    Yes - there will be a CGT event. I will have to calculate that out. I can sell some shares in this financial year and some in the next so it can be limited a little.

    But I also have a heap of equity in the shares and the CGT downside will be somewhat offset by the ability to rebuy them all with borrowed money and moving the equity to the PPOR.

    Either way I have accepted the Rinker buyout offer and they are one of my biggest holdings with Navra being second biggest.

    I also have some tax losses carried forward from my tech bubble day trading :(
     
  4. Steve

    Steve Well-Known Member

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    Hi Simon.

    I tried polishing my crystal ball, however, as always, it doesn't seem to be working properly.:rolleyes:

    What you are trying to work out involves some lifestyle and investment decisions and you need to balance these. Personally, I would go for option 2 for the following reasons:

    1. The share market, as we all know, has been experiencing bull conditions for several years. Whilst the increasing share prices have been backed by earnings growth, I am being cautious now. If you have held the shares for a while you probably have quite reasonable gains. Who knows when it will experience bearish conditions. I would prefer to lock in some of my profits to pay down non-tax deductible debt on the building.

    2. Moving sucks!:( I would rather do one move than two.

    3. Maintains the family in a familiar environment whilst your PPOR is being built. Especially good for the kids.

    I wish you well and hope your building plans come in on budget!;)

    Cheers,

    Steve
     
  5. Jacque

    Jacque Team InvestEd

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    Hiya Simon :)

    At some point you have to weigh up the decision based not solely on the financial situation but lifestyle and stress factors as well :)

    Big question, though, for you- Why didn't you sell first?! :D Golden rule of real estate- sell first :) Ah, if only life were that simple....

    Good luck with whatever you decide (I'm taking it you're leaning towards Option 2?) and best of luck with the build- exciting times ahead!!
     
  6. Simon

    Simon Well-Known Member

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    Looks like we are getting an offer 2% under our asking. Will go back to split that difference for good form's sake I guess but we are lucky to get such an offer after so long.

    I know Jen will want me to accept it when I tell her tonight. But in all honestly we can finance construction and I dread moving twice as well as renting with a dog.

    I am having major surgery in 6 weeks time with a 14 day stay. Settlement is bound to coincide with it. Then we got to move etc ....

    Why can't she be happy with this home? I have two daughters and a female dog and it seems I am always trying to make at least one of them happy ... ;)
     
  7. Nigel Ward

    Nigel Ward Team InvestEd

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    Simon you know the old saying "happy wife - happy life!".

    Glad to hear you've got an offer in the ballpark.

    Good luck with the surgery. If you're like me, perhaps you can use the time to catch up on all that reading that's been piling up.

    Cheers
    N.
     
  8. MJK

    MJK Well-Known Member

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    Now you know thats spot on! Especially if you are the only one interested in investing. Youve been persuing your goals and she wants to persue hers.

    When your goals are aligned we have Nirvana:D

    I speak from experience.;)

    MJK:D
     
  9. Simon

    Simon Well-Known Member

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    We had a better offer today. Very close to our asking -2% in fact :)

    Earlier I had told the agent about how we were concerned about finding a rental in this tight market that would take a dog and were reconsidering selling. So when she presented the offer she had already found us a suitable rental house - think she was scared of losing her commission!

    So we accepted it and settle in three weeks time.

    The agent also knew about my surgery in 6 weeks time so she had already prepped the buyer for a fast settlement.

    This is one smart agent and I wouldn't hesitate to use her again.
     
  10. DaveA

    DaveA Well-Known Member

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    sounds like she was really interested in the sale and good at her job...

    it was great to see how being up front with someone doesnt scare them away...

    wll done an the sale...
     
  11. Jacque

    Jacque Team InvestEd

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    Congrats Simon!
    Good luck with the move, the surgery, pleasing Jen and the girls and don't worry about the dog- dogs love you no matter what :D