What factors should you consider before deciding to sell your investment property?

What factors should you consider before deciding to sell your investment property

What factors should you consider before deciding to sell your investment property?

Posted on December 28, 2021 by Mirren Property Investment

Before you decide to sell your property, make sure you’ve thought about everything properly. While it’s sometimes tempting to sell it immediately because of a rumour you heard, or a trend you think is going to happen in a couple of days; still, you shouldn’t rush it. Sure, timing is important, but so is your careful consideration.

Ask yourself, do you need the money?
There are times when we are suddenly strapped for cash. The desperation this need inspires can sometimes make us panic and think about all the properties we can liquidate in a hurry, to get some money. While it is understandable, it is also not a very good move. If you need the money immediately, it lessens the possibility of getting the best offer for your property. You’ll have to settle for the first offer, which may not be the best offer.

Poor property performance
Investors, as a rule, think about medium to long-term goals for their properties. However, if it’s been some years and a particular property is consistently performing poorly, you may need to sell it. Discuss with your investment property strategist whether keeping the property or selling it is the best move.

Capital gains tax
One of the things you need to think about if you’re considering selling a property is the amount you have to pay in Capital Gains Tax (CGT). CGT refers to the tax you will pay on the profits you will gain from selling your property.

Long tenancy
You may want to hold off on selling if you have long-term tenants in place as it may limit your potential market. While investors may want to buy with a tenant in place, homeowners won’t. We all know that homeowners purchase based on their emotions, which makes them excellent buyers. Investors tend to look at the number and performance of the property. It would be best to hold off selling until you have both homeowners and investors in the market.

Equity
Equity is one of the most excellent ways of expanding your portfolio. Instead of selling a property, you can use the increased value of the property as equity to buy another property. If you are selling it to buy another property, you may not need the money from the sale.

Have your options lined up
If you are selling to expand, or at the very least, improve your portfolio, make sure you have your investment options lined up. Think about the current trend, and then think some more if it applies to both the property you want to get rid of and the one you want to buy. If they’re both almost the same, you may not have much profit from the sale.

Retirement sale
Everyone wants to enjoy life upon retirement. The sale of your property can greatly increase your comfort and ability to fulfil your wishes, such as travel, home renovations, and a fat financial cushion. However, you also need to think about the liquidated asset vs regular income from your investment property.

Low vacancy and interest rates
Potential buyers will have more confidence that your property will be a good long-term investment when vacancy rates and interest rates are low. If you want to sell, make sure that the market is favourable to you.

Property value
If you want to sell, you will want the highest possible price for your property. However, setting an overly high price may stop buyers on their tracks. It will also increase the chances of your property staying on the market for a bit longer than you’d like.

Before you even decide to sell, check with us, your property investment strategist. Book your complimentary consultation to discuss the options.


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