Welcome!

By registering with us, you'll be able to discuss, share and private message with other members of our community.

SignUp Now!

Hold or sell

M

mozsmen

0
Registered
Joined
Mar 26, 2008
Messages
5
Hello to everyone ,
ok let me get started ..I just want to get a few opinions here....I have 3 properties in Calgary...a half duplex that clears $950/month after all bills and rented out presently...property #2 a 1 year old twn home that that I have to put in $210 a month to cover costs but has appreciated about $67,000 even accounting for the drop in prices...property #3 a condo twn home that I have to put in $480 monthly to keep it afloat ....that property has dropped the most and only stand to walk away with a $15 k profit

taking all 3 properties into account...I am still up $260 a month...should I hold on to all 3 properties for a few years or sell the 1 that costs the most to keep running but only making a small return?

I have moved to ontario and would like to buy a home in the next year should i just wait it out???

thanks
 
HOLD, HOLD, HOLD...And buy a house in Ontario as well with some of your equity in current properties!

As long as they are cashflowing, why sell into a depressed market? Calgary values will take some time to rebound but those who can wait will do well.
 
I am curious if you have your rents at market? Could that change your loss on either of the properties that have negative cash flow. If you joined REIN you could learn a system to show you how and why to buy properties only with cash flow. Do you have a goal? When and why did you buy these properties? Are you losing sight of your goal? Shoulda, Coulda, Woulda.......I would look into how you can change the cashflow of the properties either through refinancing or raising rents or both and KEEP them. You have properties in the #2 spot in Alberta/Canada. I would suggest you figure out how to keep them and make them cashflow. There is likely a fairly easy solution to make that happen.
 
QUOTE (RebeccaBryan @ Oct 9 2008, 08:42 PM) I am curious if you have your rents at market? Could that change your loss on either of the properties that have negative cash flow. If you joined REIN you could learn a system to show you how and why to buy properties only with cash flow. Do you have a goal? When and why did you buy these properties? Are you losing sight of your goal? Shoulda, Coulda, Woulda.......I would look into how you can change the cashflow of the properties either through refinancing or raising rents or both and KEEP them. You have properties in the #2 spot in Alberta/Canada. I would suggest you figure out how to keep them and make them cashflow. There is likely a fairly easy solution to make that happen.

thanks for the advice...I could raise the rent abit on each property ..maybe $100 on the first and the same on the other 2 but I dont want to lose good tenants....the lease is month 2 month on one and the other 2 are until feb and april 2009
 
Although the hold strategy may be good you have not given enough details to properly analyze your true financial situation.
What projected % expense number are you using on your properties to calculate cash flow.
Your properties #2 and #3 are clearly losers monthly so the real question is how long can you afford to carry all three in the event your cash flow property goes negative due to unforeseen large costs such as a extended vacancy in 2 of the properties.
What are the details on property #1. I suspect given your numbers and not knowing the units value, mortgage, projected expenses etc. that you are possibly over estimating the true cash flow. This could be crucial to your solvency.
What are the details on #1.
How long have you held these properties.
 
QUOTE (C2Ventures @ Oct 9 2008, 08:42 PM) HOLD, HOLD, HOLD...And buy a house in Ontario as well with some of your equity in current properties!

As long as they are cashflowing, why sell into a depressed market? Calgary values will take some time to rebound but those who can wait will do well.

I dont understand your rational? he is losing over $700/monthly on 2 out of 3 houses..if it wasn`t for the one house with that great return every month he would be in the hole big time. Please explain? He has some equity in all his houses but we don`t know what is going to happen in the current market, he may end up losing all equity also. Who kows for sure? nobody.
 
I`m speaking from a portfolio approach. He is up about $260/month so currently his investments are costing him nothing to maintain. At the same time his tenants are paying down his mortgage and lastly the fundamentals indicate that Calgary will continue to grow over the long term (ie. 3-5 years down the road).

A lot of this depends on his overall plan and maybe it does make sense for him to exit now. But if he doesn`t need to sell, why not hang on and ride this out. Yes losing it all is a risk, just like getting hit by a car is a risk.

One suggestion would be to raise rents to market and try and reduce expenses (ie. longer term amortizations) to get the overall finances of these properties more in line.
 
I guess I`m disagreeing, I`m not sure if you are follwing Mr Campbells teachings or not, but even in his book it clearly states that having negative cashflow propertys is a disaster in making. To ride on one property with positive cashflow is not a smart move but each their own I guess. if he had 30 propertys and all were in a positive cashflow satus but the 2 then I would agree with you.

Investing in anything should be done with a system but also some common sense. I have made my money in the stock market, hard to time and in most cases it cant be done..but in todays market and economy I have made the decsision to pull my stocks 7 months ago. Best thing I have ever done..I will buy when it`s low again..Buy low sell high. my 2 cent
style_emoticons
 
My Dad is one of those Big Bad Land Owners in Saskatchewan. He started farming there in about 1960. Land Prices soured in the 70`s. Flat or decreased in the 80`s. He has watched the wheat prices go up and down with supply and demand and he`s watched his equity increase and decrease also. But you see, he had a vision and to this day has stayed on course for almost 50 years. From his success and determination came a lot of good for our family as a whole. He had some land that cost him more than it made but in his overall portfolio he was making money.

My Dad will even tell you he`s not very smart. He`s made tons of mistakes and probably could have been a lot wealthier. He made money by staying the course even in a market without very good fundamentals at many times. Just think if his 26 sections was outside of Edmonton!!??

If your goal is to build wealth, you need to have a goal and stay the course and find a way to make your investments work.

Quite frankly, some days it frustrates me when people living in Alberta don`t realize what they have and how their real estate investments are at less risk than anywhere else.
 
First question I would have is where are the properties located. Current and prospective developments as well as municipal infrastructure initiatives will play a large part in Calgary`s growth regardless of the time frame you are using. Some areas you want to be buying as much as you can... others you need to sell out of ASAP or stay away from if you are buying.

Second I would ask are you treating your properties as a business and are they performing to their top potential - meaning do you have the right financing on them and are you getting the best rents and the lowest expenses you can. I would want to make sure you have properly evaluated the price at which you could sell if you wanted to - IE are you looking at the listing prices in the area or do you have actual sales information.

third I would ask how much you stress over being a distant landlord/owner. Are you sleeping well and if you had a two month vacancy in all three of your properties at the same time what would it do to your personal financial situation.

I am bullish on Calgary real estate and would only recommend selling if you need to for personal reasons or if you are in a bad property in a bad/not so great location.

OR if you have a good equity position in a so-so neighborhood and want to get aggressive with your acquisitions... there are some EXCELLENT buying opportunities in town right now!





QUOTE (mozsmen @ Oct 9 2008, 08:13 PM) Hello to everyone ,
ok let me get started ..I just want to get a few opinions here....I have 3 properties in Calgary...a half duplex that clears $950/month after all bills and rented out presently...property #2 a 1 year old twn home that that I have to put in $210 a month to cover costs but has appreciated about $67,000 even accounting for the drop in prices...property #3 a condo twn home that I have to put in $480 monthly to keep it afloat ....that property has dropped the most and only stand to walk away with a $15 k profit

taking all 3 properties into account...I am still up $260 a month...should I hold on to all 3 properties for a few years or sell the 1 that costs the most to keep running but only making a small return?

I have moved to ontario and would like to buy a home in the next year should i just wait it out???

thanks
 
Mozsmen,

As shown above, even among experienced REIN members who follow a proven system, different investors have different opinions.

I would sell property#2 and property# 3 for a GREAT $82,000.00 profit! (67K+15K) and a $690 a month cash flow improvement! ($210+$480).

Another way of looking at it is selling them is like buying a property generating $690 a month for you. now that`s pretty good.

Also, now you have 82K to buy something generating a nice positive cash flow hence improving your cash flow even more! remember it`s as buyer`s market now,
use the opportunity.

My only comment is I`m afraid people might not be able to achieve the profit they expect selling these days.

Good luck!
Neil
 
I would do the same. Sell #2 and #3.
I would also take a real close look at the cash flow from #1 as it seems rather high to me.
 
to build true wealth you have to HOLD many years, decades even .. and accumulate assets ..

the trend is your friend, and the trend is inflation ..

AB has strong in-migration, strong job growth, no debt, no deficit (even @ "only" $80/barrel), a great economy and low unemployment, decent but not great affordability .. and interest rates are still low .. so AB is well positioned for eventual growth again .. after price correction has flattened out ..

Real estate does NOT grow linearly .. it wobbles up and down an inflationary slope of 4-6% ON AVERAGE .. and in the last 3-4 years we were (across the globe in UK, Victoria, Australia, Spain, BC, AB ..) WELL above that 4-6% inflationary growth .. so even a drop of 30% from 2007 peak is NOT a surprise !!

Hence the emphasis on cash-flow so you can hold .. and weather out these troughs !! It is NOT a fast path to wealth .. don`t flip .. the time to buy pre-sales condos and sell them 2 years later for a huge gain (after realtor fees, tax, legal fees, ..) is over .. and the time to make a fast buck is over too !! It is a PROVEN LONG TERM PATH TO WEALTH .. if you are patient enough and can hold long term !

Why is real estate a great investment - EVEN IN A FLAT MARKET WITH $0 POSITIVE CASH-FLOW ?

If you buy an asset with a 20% down-payment, and no positive cash-flow for 10 years, with:

a ) No appreciation (equity upside) :you have more than DOUBLED your money as the mortgage has been paid down over 20% !)

b ) 20% price increase (less than 4% annually compounded, below Canada`s long term average !!), you would have TRIPLED your money.

c ) 30% price increase (less than 6% annually compounded, about Canada`s long term average as house prices in Canada have doubled every 15 years in a normal economy !!) you would have made 250% on your money.

d ) 40% price increase (slightly higher than Canada`s long term average as house prices in Canada have doubled every 15 years in a normal economy, and AB has a better economy than the rest of Canada !!), you would have made 300% on your money, i.e. quadrupled it!

This latter scenario "d" is very likely in a strong economy like Alberta with cheap investor condos (or apartment buildings or cheaper townhouses or cheaper homes) - even if higher priced condos or houses are not so great an investment these days due to very high prices and ongoing negative cash-flow with 20-25% down! And yes, there may be better markets like SK or TX right now showing higher growth potential for the next few years due to lower prices .. but AB is OK too ! .. many markets have potential .. some more .. some less ..

HOLD ON TO YOUR (cash-flowing or at least break even) ASSETS .. AND ENJOY THE RIDE !!

Happy investing .. with cash-flow AND (at least inflationary) equity growth (in time ..) !!!!
 
You must log in or register to reply here.
Back
Top Bottom