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SELL YOUR INVESTMENT PROPERTIES NOW!

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THRESHOLD
Super Contributor
http://www.moneyweb.co.za/moneyweb-the-money-whisperer/sell-your-investment-properties-now This will no doubt cause the usual outcry on this site - just don't shoot the messenger (and yes it does happen to coincide with my view on property...)
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13 REPLIES 13
Oom_Boom
Frequent Contributor
Thanks for the link! With property timing is everything! I kept my investment properties because I bought them pre- boom days. When the bloom was off the boom I got second bonds on them and invested into listed property funds. I also bought a lot of the local funds with exposure to the London property scene. Once again, timing is everthing. Get it wrong you will be sitting with a vacant plot next to the Vaal wishing you can turn back the clock and listen to your bro in law. LOL.
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Not applicable
never really been a fan of property as an investment. I don't deny having largely missed out on the boom (other than my modest primary residence), but the principle just doesn't work for me. I think Magnus is spot on - in terms of what the property market needs to drive growth. Listed property, on the other hand - is a winner, and the sector seems to be turning. These guys can generate income that the likes of you and I can only dream of - I mean, Growthpoint, etc make rental income as well as percentage of turnover of almost every shop in the waterfront. You get a 6% yield on Growthpoint - minus all the headaches of council, maintenance, taxes, bad paying clients, duties, occupancy, ...
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Penny_Pincher
Super Contributor
Sold my investment property just before interest rates hike in march. Bought during the boom. Cash flow comes in handy, waiting patiently for the opportunities on the market to arise. Only nice thing about my property experience was assessed tax loss and never had 1 rent default in 6 years. Being landlord isn't my thing.
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Bouwer
Super Contributor
There was a article on moneyweb (can't find the article) not too long ago on renting or buying? What are your opinions? Allot of my friends and family see there personal property as an investment and I don't agree at all.. Am a fan of renting unless you can buy with a large cap amount at your disposal..
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Gert15
Contributor
Bouwer, why do you say owning your property is not an investment? If it paid off then it must be an investment? Is that your point with "large capital amount"? Thanks
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Bouwer
Super Contributor
1) It is only an investment if you are planning on selling it. 2) When you sell it you need to still buy another house to stay in or rent which sort of defeats the point. 3) When you sell the house, the value needs to exceed the initial purchase price + interest payments + capital gains tax, not including any maintenance or improvements.
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SimonPB
Valued Contributor
Bouwer agreed a home is not an investment, it is a home .. only benefit is gearing .. personally (and I own my home) I think renting is far better than buying .. Take the money saved by renting (and renting is a ton cheaper) and invest it into the market .. then you have a real investment ..
one of the biggest issues is that most people never do actually pay off their bond, typically they by another house every seven years and hit retirement still owing money on the bond .. having spent a fortune in interest and transfer costs, agent fees etc.
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Vince888
Regular Contributor
I agree with Simon. There are also monthly costs associated with owning a home like security costs, building insurance, household insurance, rates & taxes, levies etc. Assuming you take 20 years to pay off your house @ a specific interest rate, you would normally pay 3 times more than the initial price of what you bought it for. Essentially, the banks are the ones making the real money.
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Gert15
Contributor
Yes I understand your points. There are some assumptions that goes with the different arguments. Pay off the loan asap. Sell big house when kids move out and buy small house/rent when you older; balance = return on investment. Takiing all costs into acount as mentioned above though.
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Vince888
Regular Contributor
Agreed, that assumptions for the different scenarios, but unfortunately the reality is that majority of people do not pay off their homeloans.
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partridge
Super Contributor
If your starting point is long term appreciation of capital measure against inflation or a multiple thereof (weather local or international) then the variety of answers to the point made indicate that there are few who understand its place in planning a portfolio. And the key point is that we would agree that property in some form or another has a place as a STRATEGIC ASSET in such. Given its proximity to fixed interest as an investment it should be viewed in the same light. LONGER term returns from these assets indicate more than a passing link. What is clear is that a home is not an investment as it does not have the characteristics one associates with same- as Simon says. But buying an "investment property"(SIC) has to be a very inefficient asset allocation decision - and on a risk scale quite high. And that applies regardless of the benefit of gearing. Moreover it pushes away from your plate the ONLY REPEAT ONLY free investment lunch there is - DIVERSIFICATION. Price IS important of course and as one who has made money from prime property investments ( IT was still rubbish diversification ) I like us all love to take advantage of MISSPRICING - and that could for a number of years have been said to apply to property - but NO LONGER. We have seen underpriced property and we have seen low interest rates and we have seen low inflation - the first two are gone - certainly for the next few years.... You want to avoid situations where too many levers can be pulled against you - and an individual property is exposed to this more than a fund WHERE you get your free lunch and avoid idiots...Gearing here is still possible - and it has benefits.
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Rams
Super Contributor
please summarise...fell asleep in line 2
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partridge
Super Contributor
No poet ever interpreted nature as freely as a lawyer interprets truth
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