Remember Mr IQ A.K.A Nathan Birch?
Then mid last year a few cracks appeared:
For a long time now, I’ve been collecting properties like kids collect action figurines in a happy meal. I never like to see one go.
But recently, the finance environment has changed…
It’s a bitter pill to swallow for a buy and hold investor – but I need to optimize to suite the times we are in by letting go.
Just to be perfectly clear this doesn’t mean that I’ve stopped buying! Far from it, last year alone I did $10 M in new property purchases. This year I am looking at spending $6 – 7 M on new properties.
However, I see this stage in my investment journey as graduating from my ‘foundation’ portfolio into a development phase.
Personally, I am interested in buying anything that I can develop into a bigger property in the future.
Now, I’m not selling up because my grand plan has failed, vindicating the ‘negative Norman’s’ out there.
Not at all! I can sit on this portfolio and ride these finance changes out without breaking a sweat, but that doesn’t sit well with me. I want more!
I want to keep moving in a market where almost every investor is stuck in quick sand – even if that means selling.
For years now I have been channeling equity into deposits for new properties, but it’s no secret that equity is very hard to release these days – even if you have millions of dollars of it!
The reason behind this is serviceability restrictions. Anytime you withdraw equity, you need to show income to service that new loan. Sadly, the banks don’t value rental income as highly as they once did.
The fail-safe way to access equity today for anyone with a large portfolio is plain old-fashioned selling.
The cash can be used to buy up new properties better suited to the current market. For me that’s anything I can develop and flip for a chunky cash profit.
At the time H&H suggested that far from buying more property, Mr IQ might be running into a little liquidity problem. To wit today:
More to come!