Sell? No Thanks. I’d Rather Lose £50k!

By Rob King

By Rob King

Dear Reader,

 

Hello, and welcome back.  I’ve missed you.  I’ve been away travelling with the family, still am in fact.  For a few more weeks at least.  My family and I have been travelling round Europe since early April on an educational, de-stressing field trip life experiment.  It was supposed to be many things.  Some of which happened, lots of which didn’t.  And it’s also been so many other things I didn’t expect.  We’ve explored 18 countries, the longest for 35 days, the shortest for 23 minutes.  The boys have had more arguments than ever, but have also talked more than ever.  Bella has discovered there are foods she likes that aren’t beige. We’ve been brided by immigration officials (unsuccessfully).  And I’ve discovered that I can (almost) run the property business remotely. And my wife and I aren’t filing for divorce and are closer than in a long time.  All things considered, a pretty amazing result!

Anyway, you’re here because of property (I think) and not my travels, so let’s get to it.

Should you wait to buy property: NO

Should you buy property and wait: YES

Should you buy for cashflow: YES

Should you buy EXCLUSIVELY for cashflow in crappy areas that have zero chance of appreciation: NO

Should you FORCE appreciation where you can through re-furbs: YES (YES YES!)

Should you buy with an eye to capital growth, if – by chance – it should happen: YES

 

And that’s what I thought I’d write about today.

 

You’ve got to know when to sell, just as much as when to buy.  As Sam Zell would say ‘Every day you’re not a seller, you’re a buyer’.  What he means by that is that, it has to still make sense.  And if you’re not selling you’re ‘still’ a buyer of what that property produces on-going.

When you buy, what is the benchmark price for that type of property in your area, what is the £ / m2.  Where was it at the last peak?  Is there room for a further increase in the future?  Does affordability allow for future price growth?  And the all important one, that you probably won’t do (I certainly didn’t for years even though I knew if was right) … set your selling price NOW, when you buy.  The price at which, if the property ever hits that number, it’s then a ‘SELL’.  It’s done it’s work for you and it’s time to off load.

 

You’ve got to know when to take chips off the table.  Sometimes you’ll know that instinctively.  It’ll just FEEL like prices are too high.  And that’s a great time to get rid. But we can be more methodical, more systematic than that.  Plan it.  Be un-emotional.

 

Yes you could ‘never sell’ … but that doesn’t sound very methodical, it sounds a bit based on faith. And surely never say never.  Better to work out when conditions mean you should sell.  When, despite the cashflow, it’s really not worth holding any more.  If you’re not sure how, I’ll help you work that out in a later article with a time-tested methodology.  But please please do think about the fact that it might actually make sense, at some point, to sell.  And if that’s the case, then perhaps some planning around the circumstances of when that might occur, would be good.

I know that might feel a bit alien.  I spent ages thinking I’d never sell, ever.  Maybe 6 or 7 years of investing.  Do you know what changed my mind?  Sitting through the down turn from 2008 and not getting good finance, again and again … and then getting a worse lending, and then getting no finance.  And having values that didn’t look too pretty.  Robust cashflow yes (well, robust but variable – depending on interest rates).  But I could have done SO much better if I’d have sold in the heady days of 06 / 07.  Timing is everything, as they say.  And before you say ‘but Rob, no-one can time the market’.  Let me say: yes, you’re right.  But I can show that you don’t need to (well actually it’s more a theory from a friend of mine, but one I strongly believe in).

 

So when you buy …

Set a sales number.  A price you’ll sell at.  If the property ever hits that number, it goes.  Period.  Full Stop.

But there’s more … even if you haven’t hit that number, there might be good reason to sell.  Good analysis based reasoning that leads you to that decision.  We’ll explore those particular steps another time.  But it’s based on every £ being a prisoner … but a prisoner who has to work.  If your money is not working hard enough, it’s time for a change.  How do we measure that?  ROCE.  Return on Capital Employed.  If you know you know. If you don’t no problem, I’ll cover it another day.  We’ll have to get into some numbers, but it’ll be worth it I promise.

 

And if you want help right away, check out my mentoring programmes, starting at just £125 a month https://kingproperty.co.uk/sign-up-for-group-mentoring/

Rob King
Rob King

“Property Investing has totally changed my life. I get to work hard at doing something I love and spend time with my family.

Creating new homes for people, you see the smiles on their faces. It’s incredible to see the joy that you can give them.”

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