{"id":133373,"date":"2024-10-28T13:00:00","date_gmt":"2024-10-28T02:00:00","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=133373"},"modified":"2024-10-10T13:29:06","modified_gmt":"2024-10-10T02:29:06","slug":"when-should-you-sell-your-investment-property","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/when-should-you-sell-your-investment-property\/","title":{"rendered":"When should you sell your investment property?"},"content":{"rendered":"

There is an old saying in real estate circles that you should buy and never sell.<\/p>\n

While that sounds good in theory, it\u2019s not a sound strategy in practice.<\/p>\n

Firstly, most investors will consolidate their portfolios at some point in their journeys to pay down their loans and start living more financially free lives.<\/p>\n

After all, there is not much point in doing all that hard work if you don\u2019t get to enjoy it!<\/p>\n

However, the main issue with this concept is that savvy investors are not afraid to offload underperforming assets.<\/p>\n

That\u2019s because they don\u2019t want to miss out on opportunities elsewhere and research shows that future growth in their location might take a long while to arrive.<\/p>\n

So, here are three times when you should consider selling an investment property.<\/p>\n

\"Fomo\"<\/p>\n

1. FOMO<\/span><\/h2>\n

Many investors wait too long to sell their property because of a recent boom-like market cycle.<\/p>\n

In essence, they have FOMO<\/strong> or Fear Of Missing Out<\/strong>.<\/p>\n

Perhaps the market has experienced strong growth for a year or two, but they fear that if they sell now, they will miss out on any future growth.<\/p>\n

Savvy investors know the signs of market peaking and choose that moment to sell their properties so they can maximise their profits to invest elsewhere.<\/p>\n

Unsophisticated investors, on the other hand, leave it too late and end up with a property that starts to go backwards in value \u2013 Gladstone in Queensland is a good example of this over the past decade.<\/p>\n

Investors who sold at the peak of that market made solid returns, whereas those who had FOMO are now stuck with a property that is worth far less than they paid for it.<\/p>\n

2. The Waiting Game<\/span><\/h2>\n

Far too many investors get stuck in a growth waiting game.<\/p>\n

They may have bought into a location because of the promise of infrastructure that has yet to materialise, so they sit and wait in vain for the returns they thought they\u2019d make.<\/p>\n

Of course, sophisticated investors only ever buy investment-grade properties<\/a> that have a number of strings to their bows, so they are never reliant on one factor to stimulate price growth.<\/p>\n

Unfortunately, often because they don\u2019t want to feel like they \u201cfailed\u201d, investors will stubbornly hold a property that is unlikely to do anything spectacular.<\/p>\n

The thing is, holding that property would actually be a failure, not selling it.<\/p>\n

3. Opportunity Cost<\/span><\/h2>\n

Educated investors recognise that there are myriad markets across Australia that offer better chances of capital growth over the short- to medium-term.<\/p>\n

<\/div>That\u2019s why they are not afraid to sell a property that is not kicking any major capital growth goals.<\/p>\n

Sure, there are costs involved in selling and buying elsewhere, but selecting a location and a property with strong price growth potential means they are likely to make that back in equity within a year or two.<\/p>\n

Conversely, by naively hoping for a market upswing that has no bearing to reality, they are likely to be out of pocket by much more over the long run.<\/p>\n

In fact, holding an underperforming property might end up costing them hundreds of thousands of dollars.<\/p>\n

If you can only afford to own two or three investment properties, then you must make sure that you own the best properties you can afford.<\/p>\n

Selling an investment property that is not doing its job, which is creating wealth for you, is not a bad thing.<\/p>\n

Rather, it is a sign that you recognise there are better opportunities out there that you don\u2019t want to miss out on.<\/p>\n

That is what the smartest investors do all the time, so they stay one step ahead of the investment pack.<\/p>\n