You buy an investment property with a long-term goal in mind. So selling it before you’ve achieved that is never the plan. But circumstances change, making selling an investment property the better financial decision. For those who aren’t sure what to do, here are seven signs it’s time to sell that Inner West investment property.
1. You’re not getting the returns you expected
Investment properties offer two types of returns: regular monthly income from rental fees, and capital growth. But your rental yield may suddenly drop into the negative values, or the neighbourhood may stagnate. At the end of the day, if the property is costing you more than it’s earning, then it may be time to sell unless you can wait for the capital growth.
2. You’ve found a better investment opportunity
The whole reason people get into the property investment game is to increase their capital gains. So, if you find a reliable opportunity guaranteed to do that, then absolutely go for it every time! Just don’t forget to research all the costs involved in buying and selling a property beforehand, though.
3. You want to invest elsewhere
There may be cases where you just don’t want your current investment property any more. You may be relocating long distance, or you may decide you want to invest in commercial rather than residential property.
4. You want to consolidate your assets
If you own more than one smaller investment property, you may decide that managing one larger property is the better option for you. Whatever your reason, ‘trimming the fat’ on your investments while increasing your capital growth is never a bad idea.
5. You want to retire
Investment properties and retirement have always gone hand in hand. However, capital gains tax is a serious factor to consider when selling any property – no matter your age or the reason. Different things affect your marginal tax rate, and there are circumstances where you could qualify for 0% capital gains tax. So always consult a professional before you sell.
6. Someone makes an offer you can’t refuse
It doesn’t happen often, but you could get an incredible offer that is way above market value on your investment property. And although you lose out on the long-term rental income, the profits leave more than enough for you to invest in another property and even have a little ‘silly money’ left over.
7. Maintenance and recommended renovations are too expensive
Maintenance and renovations are a big part of owning an Inner West investment property. You won’t be able to attract renters if the taps leak or the kitchen is circa 1975. And if you can’t afford the upkeep, selling the property and investing that money elsewhere is a better financial decision.
Investing in real estate has the potential to be lucrative – but only if you don’t make the mistake of holding onto a property when it has passed its best-by date. So speak to us at Belle Property and consult with your financial adviser regularly.
We’ll help make sure your investment property remains a blessing rather than a burden!
Looking for help selling your home or renting your investment property? Our team at Belle Property Balmain support homeowners across Balmain, Balmain East, Birchgrove, Rozelle and Lilyfield. Feel free to get in touch for a no-obligation discussion or property appraisal.