Trading property costs a lot.

Selling an investment property can be like killing the goose that lays the golden egg.

Jason Gwerder one of our Directors and a successful Property Investor with a healthy portfolio, says that ideally, you should never sell an investment property, unless you have a very effective short term strategy to get the LVR below 60%.

He also adds that, investors should be using the accumulated equity in an existing property, to add to their portfolio, rather than replacing an existing property with a more expensive one.

“Don’t make the mistake of thinking that when the property has doubled in value, it won’t go up any further and that it is time to upgrade to something more expensive! That is not the right logic you should be using, when investing in property”.

Is there ever a good time to sell?

Jason says that if you have held your property for more than 5 years and the capital growth has not performed ahead of inflation during that period, it is a dud asset, so get rid of it.

Another instance, is if you are nearing retirement and you want an unencumbered income-producing portfolio- Jason says

 “ Get rid of the duds and lemons”

Also if long-term demand starts to decline, consider selling because both rental yield and capital growth could turn negative for many years

Jason says that the best time to sell, is when the market value of a property, is actually higher than its’ intrinsic value

“Developing an exit strategy is best done when conditions are favourable. Creating a plan when you are under duress, always leads to bad decision making”

Here are Jasons’ 4 tips to avoid panic selling

• Consider your future cash flow when first buying a property

• Make sure you have enough cash buffer, should things start heading south

• Develop a solid action plan that deals with worst –case scenarios

• Make sure you have the right landlord insurance in place (ask us about Landlord Insurance and we can put you in touch with the best product from our Finance Partner)

   

If you haven’t started Self-Managing your properties yet using RealRenta, you can trial RealRenta for Free now for up to 2 months.

Visit www.realrenta.com.au and you will never hand over your rental income to a Property Manager again!