Bread & Butter Properties

Bread & Butter Properties
Generate passive rental income

Monday, June 18, 2012

Is it time to sell your property?

I have been contemplating this question for a while now. While there is no real impetus to sell any of my rental units, it is always good to review the situation from time to time.

What are some of the pros and cons of selling now?

Pros:
1. the prices of units have increased since I bought them - on average around 25% since 2008, which is not bad returns,
2.  not have to worry about collecting rental and raising rent which can some times be a pain,
3. reduce my gearing so that when (and if) the local property bubble eventually burst, I would have some ammunition to buy some gems, at rock bottom, bargain prices.

Cons:
1. If I sell now, I won't be able to get financing for new property, at higher margins since BNM still imposes the 70% LTV for 3rd property and above,

2. What else can I do with the money raised from the sale of the unit? Invest in shares? - you must be joking. Invest in gold perhaps? - good idea since its a physical asset.  Knowing what the alternatives are out there is important - the last thing you want to do, is to keep $ in FD!

3. Sell the golden goose, and there goes the income stream - question is: whether the capital gains from selling is greater than the property's cash flow (i.e. the excess above your interest payments) if you continue to hold on, longer term?

These are some of the questions I am pondering now; as my Uncle Sam says: "there are no investments SO good that you got to have 100% of"  So, I guess there is no harm selling one or two of these, if the price is right? After all he should know: he made his millions buying and selling rental properties in Birmingham, UK.

Chris
copyright Chris Gan@2010, www.breadnbutterproperty.blogspot.com

3 comments:

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