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The first and most important rule of property investing is to buy successfully and not sell. Here are some exceptions to this rule;
Let’s start off with why you would keep an investment property. If you buy a great property in a prime location, it will always create a passive income for you, so there will be no need to sell it.
Another reason is selling property is pricey. It costs you money in styling, agents fees, legal fees, possibly a loss of rental income during the process, and taxes.
So, how do you know when it’s the right time to sell?
One reason people make this decision is that they bought badly in the first place. Often times when we’re holding onto a bad stock that’s weighing our portfolio down, the only option is to sell and try again. Let’s tackle the big question – how did you end up buying a bad property?
LACK OF PLANNING
Too many people who have got the means and desire to become property investor jump in with zero planning.
They listen to the wrong people about what, when, and where to buy – which leads to decisions that aren’t based on expert information or knowledge.
Property investment is serious money and time-consuming endeavor, and to do it properly you need a well-prepared, thought-out strategy. An investment plan will ensure you ask and answer the right questions like these and so many more:
1. How much income do I need to live the life I want?
2. How many properties will I need to make that income?
3. How long will it take me to buy those properties?
4. Do I have the means to create financial buffers for myself and each of my investment properties should things change?
5. Do I know what kind of loan structure I need?
Without a strategy you’re clueless, which is never a good place to be when it comes to smart investment choices.
WHAT IS A BAD PROPERTY?
In property investment, a bad property is one that is holding you back and not making you the profit you want. This one property is stopping you from achieving enough passive income for you to live your best life.
How does a property hold you back?
It’s not bringing in money It’s too old
Negative cash flow is the last thing we want as property investors. Cash flow is the main priority when investing and without it we can’t buy our second, third or fourth property, etc.
Even if the property is growing in capital value, if the cash flowing out of your pockets is more than you’re bringing in, you won’t be able to borrow enough to raise your next deposit. You also won’t be able to access any equity you’re making.
Equally, an older property that is costing you so much in maintenance costs and repairs is not worth it either. If you get to the stage where it’s going to cost you less to demolish and rebuild, than it will to fix up the current structure, you have an important decision to make.
WHEN IS THE PROPER TIME TO SELL?
While there might be times when selling is the right thing to do, take your time and think about what you’re trying to achieve.
What are you going to do with the cash you get from the sale, where will that money go to help you the most?
Taking your money from a property that has nothing else to offer, into one that has long-term potential might have some costs, but they’re opportunity costs and will be worth the price.
Always make sure you consult some experts who can help you create a clear strategy. Agents with expert knowledge like those at SKAD Real Estate can help you visualize your long-term goals and help you know how to get there.
Let our team at SKAD Real Estate teach you about the different strategies around buying and where appropriate, selling.
Contact us about one of our information and teaching events, where you’ll get the tools, resources, and support to thrive, on your path to financial freedom – whatever that may look like for you!
Contact us now and find out what you need to know about the current market landscape and how you can make it work to help you reach your goals!
If you own a property and would like to know what it may be worth in today’s market, I’d be happy to give you a FREE market appraisal.