I sold a Blue Wealth property

Posted by Andrew Mortimer

In my four years on the Blue Wealth team, one of the mantras repeated at our events and in our meetings is, ‘Buy good assets, hold them, and wait. Let the property do its job’. This is the silver bullet, the holy grail of Wealth Creation – Buy good assets and hold.

So, last year, contradicting this advice, I sold my first Blue Wealth investment property—a great apartment in Brisbane that my wife and I bought through Blue Wealth in 2015. So why did I sell? I’ll get to that shortly.

Our fundamental purpose at Blue Wealth is to help Australians invest in good property assets that will provide financial independence and the ability to fund the lifestyle they would like at and before retirement. We do this by helping our clients grow their asset base as large as possible with what they can afford and hold onto it – another mantra heard at our events.

We help Aussies create wealth by taking a minimum 10-year period (ideally longer) for this buy-and-hold approach to catch at least one or two cycles of the property market. Based on historical figures, property has grown at 5.6% over the last 30 years or doubled in value every 13 years.

Holding isn’t always easy, though. Unfortunately, things happen along the journey, and some people are in a position where they may need to sell before time. Family death, divorce, change in job, and other situations can impact our ability to hold our investment properties.

Other pressures, like the 13 interest rate rises over the last 2 years, can have a huge impact, particularly if borrowing was tight in the low interest rate environment we experienced during the COVID years. It takes a lot of courage to take the plunge and buy an investment property, and it takes discipline and resilience to hold it.

So why did I sell?

As my wife Chantelle attests, I’m a mad budgeter and spreadsheet nerd. I’m always looking at ways to buy more investment properties, not sell them. I was like this before joining Blue Wealth, and it’s only exacerbated since being exposed to the research, upcoming projects, yields, and so on. The decision to sell germinated from one of my nights checking our family budget and not seeing a way to move ahead. An effective stalemate of expenses v income. How can we do the next big thing, another investment property? a family holiday? renovations? And more importantly, if rates continue to push up, what will we do? What levers can we pull to take control of the situation?

After some back-of-the-coaster notes around likely sale price/profit calculations and what we could do with these funds, I chatted with Tony to tell him I’m seriously considering selling our first Blue Wealth investment. His response ‘Okay, what’s your plan?’ I expected something more like, ‘Don’t be stupid; find a way to hold it and wait.’ Having a plan was critical to comfort in our decision to sell. While initially selling came from a reactionary place, ultimately, we had a purpose and a plan. So what was it?

Part 1 – Making Memories

Early last year, our eldest son, Lachlan, turned 11. I couldn’t believe he has been around for over a decade, and the thought of blinking and he’s 22 (and our youngest Harry-20) means they will be young men and not be as reliant on mum and dad (A blessing and a curse). Discussing this, Chantelle and I blueprinted what we want our next few years to look like. It struck me that money isn’t everything. You need to sacrifice along the journey to create your wealth. We decided that cashing in to make memories with our family is now more important.

I type this seated in 55D on NZ104 Auckland, bound with the family on a holiday where the boys will see snow for the first time. I am conscious of living in the present as much as possible, spending quality time with the family, making memories, and not being overly concerned with the distant future. The whole ‘it’s about the journey, not the destination’ approach. We are selling our investment funded this holiday and a couple of other experiences for our family over the next year or two.

Part 2 – Continue Wealth Creation – Reinvest

The next logical way for my family to invest in property is through a Self-Managed Super Fund (SMSF). Like many, our borrowing capacity is tight in our personal names, while an investment via an SMSF is feasible. We decided to contribute part of the capital gain from our sale to our super to boost our balance.

Once we buy a property in an SMSF, our property portfolio will be back to its pre-sale state.

Offsetting part of our Capital Gains Tax obligation through this super contribution was a nice bonus.

Did we make the right decision?

Now, the truth behind timing the market—I probably left $20-$30K on the table by selling in September 2023 instead of today. Perhaps I’d be sitting in 1A instead of 55D! That would have been a handy additional amount to contribute to the memories I’d like to make with the family, but no one will ever time the market perfectly.

A key part of buying or selling a property is owning the decision. We won’t move forward if we spend time looking back and running alternative scenarios with a more favorable outcome. If you’ve got a plan and buying or selling a particular investment property is a tested part of this plan, then it’s the right decision.

Don’t sell without a plan.

Too many people decide to sell an investment property without diligently and logically sitting down and running scenarios and numbers. As touched on earlier, unfortunately, there are times when there is no option but to sell. You shouldn’t do this alone whether you want to or have to.

Before you decide to sell your property you should consult your team of experts including your Mortgage Broker, Accountant and of course our team here at Blue Wealth. There may be a way to hold your investment property that hasn’t been assessed, and you should never sell on a whim or out of fear.

If you are considering selling an investment property, whatever the reason, reach out to us for a chat. Let us help you get all the facts and figures on the table and make the right decision for your family. I know selling ours was the right decision because we had a plan, and it’s being implemented.

Posted by Andrew Mortimer, on 23rd Jul 2024