Just a question for those with investment properties. Is anyone considering selling based on these future interest rate predictions? I have 4 cheapies, 2 are on decent size blocks in South Australia which I will be keeping no matter what and also have 2 townhouses near Brisbane which I would sell for the right price. I can afford rate increases but just curious what everyone's plan is moving forward?
Is Anyone Selling Their Investment Properties Due to Likelihood of Interest Rates Increasing?
Saul Goodman on 03/05/2022 - 11:41
Last edited 03/05/2022 - 13:12
Last edited 03/05/2022 - 13:12
Poll Options
- 90No
- 3Undecided
- 6Considering
- 3Planning on selling some
- 9Planning on selling all
Comments
What do you mean sweating? You do realise most people that sell their IP now will make a good amount of profit.
lets not forget the capital gains that will be drained out of the system.
Money that will evaporate.
Personally i can't wait to see the articles on the heavily leveraged "21 year old who just bought his 16th property" complaining that they can no longer afford their mortgage.
12 years of rate drops will be a painful bandage to pull off and will result in a completely different approach to taking on debt as soon as you have to start setting aside more money.5.1+% inflation won't disappear overnight
The current inflation is just the beginning, RBA doubled the money supply since covid. Everyone should be earning twice their wages by now otherwise, guess who has more money now?
Why are people so quickly assuming that someone that has accumulated 16 rental properties isn't financially savvy enough to have proper risk management?
The probability that property hodlers getting liquidated is lower than borrowers that struggle to scrape together an 80% LTV.
@rektrading: Dont need to be financially savvy, just increase the rent a lot. Apparently landlords are increasing rents in double digits.
@rektrading: Rate rises aren't going to hurt those with investment properties. If for some reason those people can't already cover the increases, they can either increase rent or offload some of their portfolio. Given typical rent payments at the moment seem to be more than my loan repayments, I don't think any investors will be sweating. Likely cheering at the excuse to increase rents further.
The ones who are getting hurt the most by the rate hikes are the families who managed to scrape together enough savings & income to finally get themselves a home.
majority of the landlords would probably pass on the rate rise to their tenants, an excuse to raise rental income if they haven't already because of covid
If the market won't support a rental increase, it would be counter-productive to do that.
Get the word out to all landlords to raise the rent.
Thats not how it works. Prices for purchases are based on how much people can borrow, whereas prices for rental are based on how much people can pay.
Not really, if people can only pay a fixed amount then they'll have to move to a place that isn't as good or is further away. Some landlords will have enough expenses that they have to raise the rent, if enough do that then the supply of cheaper properties will reduce, and there will be more demand for them, and landlords who could absorb the cost increases will raise rent in order to get fewer applications, and rents rise across the board. If not many landlords pass on the cost increases, then renters will apply to other places, and their properties will sit vacant,until they lower it enough to attract tenants or sell. Supply and demand.
So many variables to consider; I think everyone's situation will be different to everyone else.
I'm not considering selling BTW.
Is anyone considering selling based on these future interest rate predictions?
Let me know if you're considering and i'll buy them off you.
Hope that answers your question :)
People panic selling pristine hard assets for fiat 💵 are ngmi.
Rates going up, property values probably going down. Isn't that a strategy itself to then sell and buy something better for cheaper in the future? How is making more money in the future a NGMI statement?
History shows that prime city real estate only goes up over time.
Panic sellers are controlled emotions. The biggest landlords in the 🌎 aren't controlled by emotions and will buy from the weak 🙌.
What about stamp duty, taxes, agent fees while selling? You better be sure the drop is worth it. I'm keeping all of mine. You getting ready to sell, i'm arranging finances to buy end of year or in 2023.
@rektrading Please stfu
But if you want to access your money over the next 10 years and not cop a loss you'd be wise to get out now.
Easy.
Use an HELOC.
If it's negatively geared then what's the issue?
You would have factored in future interest rate rises prior to investing. Yes, the good times are coming to an end but from here on in it should be normal times not tough times.
The largest landlords in the 🌎 keep buying real estate no matter what happens with the cash rate.
The little guys selling will regret not hodl.
HODOR!!
I 😭 when he 💀. ❤️ that giant.
Buying Amazon and Block? Or gold
$AMZN is on 🔥 special.
Down -24.17% 1mth.
I buy for growth Amazon ain't gonna increase that much in the future
$AMZN is having a 20 to 1 split.
The price will continue to pamp after that.
Any real estate investors (indeed anyone with a significant loan) would have taken into consideration that the interest rates are at historic lows and will likely go up (than stay low or drop even more) over the foreseeable future.
This is no shock.
Hoping to buy one at a discounted price after the interest rates go up.
I'm good having 3 properties.
My interest rate is still fixed for another year and a half. And even then, both the wife and myself will soon earn a lot more than we did early last year.
Besides, property investment is long term. I just get my rental income and pay my monthly mortgage payments, levies, bills and maintenance costs. It helps I'm a DINK as well.
Shares seem less stressful to me. Houses are long long term investments
It's not really stress to me. You can also get stressed seeing your share prices see-saw if you're constantly looking at them. Personally, it comes down to leverage.
I have shares but it's a boring portfolio of ETFs and blue chips. I also have startup shares but they're not worth anything until an IPO (if it ever comes).
But coming back to leverage, I have no experience dealing with margin loans or daytrading so property investment is a more palatable alternative.
They havent been long long term in recent years…
A Poll associated with this post would of been better…
Added
I will keep my IPs although tempting to sell one to live mortgage free. I will most likely try to pass on rate rises to renters but have only put up the rent $10 over the last 3 years.
yes but remeber while your house is worth more now, for the renter it is actually worse. Applicances are now dated, paint is older. Air cons dated. Pain looks worse.
Why would you sell? Unless you're planning to not invest in anything ever again? Could make sense if you're about to retire and want to put the money in your super but if you're about to retire there shouldn't be much if any of your mortgage left to pay.
once you buy… never sell
I selected no on the grounds that I don't own one.
But if I did, I wouldn't sell.I wonder how an interest rate rise will affect those people with 'holiday homes' (with a mortgage)?
I've seen a lot of 'holiday homes' sold recently, to capitalise of insane property value increases, but what surprises me is that a lot of these appear to be still 'holiday homes' rather than principal places of residence. Surely if some people bought in at what may be the top of the market, they may need to now consider selling one and retaining one (as a PPOR).Holiday homes could just be used at AirBnB’s during peak season and that could potentially take a chunk of the mortgage if planned well.
No change on that potential.
Don't forget that the owner has to declare that income, and expenses (for that period), and they lose their use of their property for the prime period they probably want to be there.
I voted undecided… as nobody else had.
Where's the option - can't afford an investment property?
Put rent up last month ;)
I think that you might be a bit early with this question. Wait until 2 or 3 hike when the trend up is somewhat clear.
Also, inflation might be much more effective in tightening the money flow now as rate hikes take time to have an impact.Good to see so many hodlers - the trade is certainly crowded.
LOL no.
In for the long term for these.
Good for you.
Not so good if you used short term financing to pay for you long terms goals. And levered up to the eyeballs.
Every financial collapse started in these conditions.Of course, there will always be people out there that have leveraged themselves far more than they can service.
We will see who is naked once the tide goes out.
It will be interesting to see what properties will be sold as fire sales.
Cashing out of hard assets in a +15% inflationary environment is worse than the potential drawdown.
Leverage is the key to the right answer. It is fun on the way up but very painful on the way down.
Depends on your entry point of course.
Op on shaky ground lol, 8% plus coming soon enough
I'm not on shaky ground?
We’ll see
You won't see anything.
OP said in the OP that they can afford rate rises.
No one mentioned losing their job as part of the concern of interest rates going up. In the 1989 recession and interest rates up to 17%, bosses sacked many people and unemployment was high. Can’t pay your mortgage without a job, and older employees will suffer from ageism when it comes to getting another job as well. Thoughts?
Some ozb say that a tanking the economy is good for Australia.
Most are too young too remember these times, let alone have a grasp of economic history.
The Mrs and I were always planning on selling our current properties… got a house being built so being able to sell towards the peak of the unit and townhouse markets in our areas will give us a bit more of a buffer for a likely 200 basis points increase over the next 1-2.5yrs (though, having watched interest rates since the 90s, I wouldn't rule out seeing 7-8% in the next 10yrs).
It's just a matter of how much steam is left in the property market. Much like the boom, houses will move first… then townhouses… then units.
Buy the dip people
that's a long way away
Sorry, I keep forgetting sarcasm gets lost in text. Sadly I think you’re right, it’s a long way away but it will come.
Surely anyone who purchases investment properties or takes out a mortgage will take into account a couple of percentage point increases as part of the deal.
My broker used roughly 5% as the interest rate gauge when assessing my suitability for a mortgage, whilst actual rates were around the 2.25% mark at the time.
I don’t understand the logic that LL’s will increase rent because of an interest rate increase.
Rents have increase 20-30% in the last year, without any increases to interest rates. Rent yields are based on the vacancy rates, which are at record lows. If rents go up, it won’t be purely based on interest rates.
looks like those with XX amount of IP's are sweating knowing that the good times wouldnt last forever