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When Do You Sell?

EXACTLY [quote user=TangoWhiskey][quote user=2ndstory] [quote user=ThomasBeyer]I talked about this last night at the Calgary REIN meeting, to be repeated tonight in Edmonton. You sell for a variety of reasons, such as you need cash, your investor partner needs/wants out, if the market is very hot, if you have negative cash-flow or if you have repair bills coming up (say a new $20,000 roof) that exceed your reserves.




I would say that the only one of those that really stands out is that the market is strong.


So how does one determine if the market is strong? Really obvious signs of irrationality - like sales of multi-family in California in 2005 that didn't even cover operating expenses let alone mortgage payments? With the demand for multi-family right now could this asset class becoming over-valued in the hunt for yield?
 
[quote user=housingrental]Hi Nik

What conditions need to be in place for you to feel the market has peaked?

Would you rather sell now and "leave something on the table" or TRY to sell at a lower price in future?





I think Winnipeg is still undervalued. Maybe not in every part of the city. Some neighborhoods have really jumped in the last couple years, but we are still way behind Saskatoon. There's a lot of new development happening here that I think will result in good things for real estate. ie: new Ikea store, Center Port plans, rapid transit system, and now an NHL team. I will continue to invest here. This particular property has probably increased in value 30% since I purchased.



Nik
 
Thanks for the response Nik but this does not answer my question - which would be of benefit to you to answer.

What conditions need to be in place for you to feel the market has peaked?



[quote user=2ndstory][quote user=housingrental]Hi Nik

What conditions need to be in place for you to feel the market has peaked?

Would you rather sell now and "leave something on the table" or TRY to sell at a lower price in future?





I think Winnipeg is still undervalued. Maybe not in every part of the city. Some neighborhoods have really jumped in the last couple years, but we are still way behind Saskatoon. There's a lot of new development happening here that I think will result in good things for real estate. ie: new Ikea store, Center Port plans, rapid transit system, and now an NHL team. I will continue to invest here. This particular property has probably increased in value 30% since I purchased.



Nik
 
[quote user=housingrental]This is a bad idea - why sell and chop off upside at a certain point?



I agree.



[quote user=housingrental]Good idea to sell when future doesn't look too great - expenses increasing faster than rents, minimal reason for upside in valuations, lots of reason for downside.



These are good reasons to sell.



I would also sell if I needed the cash for personal reasons.



Best regards.
 
[quote user=housingrental]What conditions need to be in place for you to feel the market has peaked?
Prices never peak. They may temporarily peak, say for 4 to 12 years.



Inflation will eventually lead to higher prices .. but it may take a decade or more in some cases.



The price has temporarily peaked when prices have risen for speculative reasons beyond what is deemed reasonable based on fundamentals, such as in-migration, job growth, wage growth or GDP growth .. such as



a) the peak in 1981 before the NEP was introduced in AB,

b) the 2007 peak in Edmonton in apartment buildings due to excessive condo conversions where we unloaded 50% of our AB portfolio ! likely prices will come back to that level in 2012 or 2013 again .. a 5-6 year delta from peak to peak !
 
[quote user=2ndstory]When shouldn't you sell?
if you have enough income from this property or other sources, when cash-flow is positive to hold, when value has upside potential, when no one of the investors wants a significant of (usually taxable) cash, when the opportunity cost is similar to other investment
 
Rickson - Thank you for the positive post!



Thomas - You have are trying to redefine the meaning behind common language.....
 
[quote user=housingrental]Thomas - You have are trying to redefine the meaning behind common language


huh ?
 
[quote user=ThomasBeyer][quote user=housingrental]Thomas - You have are trying to redefine the meaning behind common language


huh ?




I'm not sure what this means either. ???



Nik
 
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