16 Apr Contingency Factor for Growth
Contingency Factor for Growth
On top of your opportunity cost ROI what you would then add is a contingency factor for growth. How much is this property in your estimation going to give you for growth over the long term, or the short term? You might be making a short-term decision. You may think this property is probably in an area that’s still going to have a little bit of a run.
Over the short term you are probably going to pick up 7 per cent or 10 per cent or 15 per cent or whatever else it might be. This might be a determining factor for a short-term hold instead of a long-term hold or a long-term with the benefit of being able to use that short-term gain in equity to borrow against to go and do something else, to get your $9,000 back. It is not recommended that you sell, however it is sometimes the right thing to do. Adhere to the policy of hold if you can; sell if you have to, because over the long term – even in 20 years it will be worth double.
We always recommend that you seek professional advice as this blog is for general information only