Would you sell your investment property?

[2BAD4U]

Many advisors, books, etc, say that you should never sell your investment property. My thoughts are that this is not always true and you may actually be better off selling. For example, in my situation I would expect to have enough equity in my investment properties in 2 - 3 years to be able to sell them and pay off my own home and be debt free :D

This would then leave me in a position to invest what I was paying in mortgage repayments and / or purchase another investment property(ies) and have ALL my repayments 100% tax deductible.

Like they say, everyone's circumstances are different, etc, etc. but I think for most investment "GURU'S" to be saying never sell is poor advice.

[Wildkactus]

I am in the never sell camp, but that does not mean I will not bulldoze the property and redevelop, It's the land that is the main investment for me the property is just the cash flow to hold the land.
I also think that most properties have a used by date and you need to upgrade these to keep with the current trends and the like, I will redevelop where someone else may sell and upgrade there portfolio that way.

But I guess it does come down to your situation, investment style and risk level.
everyone has a differnet level and outlook on these.
I don't think there is a right or wrong here it will all depend on the persons situation.

[reals007]

I also didn't sell my investment property. Many agents and buyers forced me for sell my property but I need my property and its important for me. I have not any plan for sell my property.

[jbocker]

Plan is not sell any property, But I did once when I got an offer I couldnt refuse. A real dream situation.

Anyway would not normally sell. I apprecaite 2BAD4Us situation though where you sell to pay off your home loan. A good strategy. Get reid of the non deductiable debt and take out loans against investments.

Since paying off the home I have not taken equity out on it to fund another property*. The reason being if you end up in the poo, and the bank needs to regain their money they will take what they need to get it as quickly as they can, that could easily mean your home particularly if the rental property has become marginal.

* I had done this initially to start my property investments, but paid this off first. Subsequent deposits for other investment property have come from equity in earlier investment property.

If I do sell, it will be when I retire, so that the proceeds become my sole source of income, abd CGT calculated appropriately. Not selling I am hoping that rents will fund retirement (I dont want to be dependent on a pension).

Cheers

[awg]

One big advantage of retaining property, is that the equity can be used to fund further purchases, maintaing negative gearing, and build portfolio size, once the first property becomes cash flow neutral.

[younginvestor]

FOR THE RIGHT PRICE, ANYTHING IS FOR SALE!!

I think this was said by Lang Walker, correct me:)

[brianbrockman24]

I know this is an old topic but I think it is a very interesting topic.

Although, there are distinct advantages to holding a property and not selling. I cannot say that I would never sell an investment property. If selling the property meant I could get a better property instead, I would jump on it in a heartbeat.

Investing is a business and there should be valid exit scenarios. If you don't, it is possible that you are throwing your money into a money pit.

My two cents.


Brian
http://seekingfortuneinnewyorkstate.com/

[Ladyhawk]

great thread...enjoyed the read.

[MelbKate]

I'd only sell if the capital growth wasn't sufficient e.g. an off-the-plan place that turns out to be overpriced and has barely grown in value 2-3 years later. In that case, best to break even (avoiding CGT) and reinvest the money in a better property.

[rebel25]

i am selling now becuase in tassie i can buy for $235k a brand new home that will return $351 pw and comes with a 10 year guarantee from aust federal govt.

the homes are min 6 star sytandard in great locations and hobart had th highest capital growth of any city in australia for last decade ( ave 12.64% pa)

what are u waiting for?????

www.paramountgroupaustralia.com.au

[miles2152]

2BAD4U, it all depends on your goals. If paying off your home is your ultimate goal, then sell. If you are planning on continuing to invest, then you might should reconsider. Once you sell and pay off the home you live in, then you will have to borrow to get a new investment property, likely at a higher interest rate then what you are paying for loan on your primary home. Sure, you may be deducting the cost 100%, but you also have to be sure you can recoup that cost in rental income to break even.

[MelbKate]

2BAD4U, it all depends on your goals. If paying off your home is your ultimate goal, then sell. If you are planning on continuing to invest, then you might should reconsider. Once you sell and pay off the home you live in, then you will have to borrow to get a new investment property, likely at a higher interest rate then what you are paying for loan on your primary home. Sure, you may be deducting the cost 100%, but you also have to be sure you can recoup that cost in rental income to break even.

Totally agree. Capital gains tax is also important to consider - you don't want to take one step forward and two steps backwards unless you have no other choice.

[Gift Baskets]

Yes, we are in the midst of settling.
We held onto our property, an off the plan top floor apartment in the redevelopment of a previously industrial inner city area.
Have made the decision to sell and revamp our family home as we fear exhausting ourselves.
But it was worth it. Now to focus on the kiddies 1 and 3 and have some breathing space.

[pwsolutions]

I sell and buy another. thats my business.

[MelbKate]

Yes, we are in the midst of settling.
We held onto our property, an off the plan top floor apartment in the redevelopment of a previously industrial inner city area.
Have made the decision to sell and revamp our family home as we fear exhausting ourselves.
But it was worth it. Now to focus on the kiddies 1 and 3 and have some breathing space.

Fantastic! There are no right or wrong answers to the question; rather, it's about making choices that are suitable for a person's individual circumstances and goals.

[positive_investor]

Very interesting post.

I am traditionally in the "don't sell" camp but have recently sold off two of my properties due to insecurity over exchange rates and political stability. Of course, these two properties were offshore, (in South Africa) and after a painstaking benefits analysis I decided it would be better to free up the equity and send some to the UK to buy some property and some here for other investments. In "stable" countries like the UK and Aus one really has to consider the investment model. If you are looking for capital growth over time and have the ability to see out the dips then spend a lot of time finding the right locations and hang onto the property for the long term. If your business is to generate cash flow then of course, flipping a property by adding value and reselling is the best method. Both cater to different appetites for risk and input required and both have made many multi-millionaires.

Enjoying the forum as a new user.

J

[jenny.smith]

The reason is, if you end up and the bank is taking the money back, What They need it as soon as possible, which could easily say at home, especially if the rental property has become marginal.

[Bronwyn]

I am in the 'never sell' camp and in a perfect world that would be great. The reality is that sometimes a property does not perform as well as we might expect or our personal situation can change. I sold a property two years ago because I wanted to take six months leave at half pay so I could travel, but my portfolio was negatively geared and I was only just able to make my mortgage payments on full pay. Selling the property gave me some breatihing space.

I know that financially I would have been better off to hold the property but then I would'nt have been able to afford to take the leave, much less travel anywhere. I don't regret selling it for a second but I don't want to do it again. My portfolio is now positive cashflow and when I make future purchase decisions I want to keep it balanced.

When you are contemplating selling an investment property you need to keep in mind that you will have selling costs, CGT, lost opportunity for growth while you are out of the market and then the purchase costs for the property that you replace it with. All of these costs will bite into the equity that you have in your portfolio so your overall net worth is less. This equity could have been used to purchase a positive cashflow property if cashflow is the problem you are trying to solve with the sale. The additional cashflow can be used to pay down personal, non-deductible debt.

On the other hand, if the property is not performing and you don't expect this situation to change, then sometimes you have to take the hit so that you can move that equity into a property that will achieve a better result in the long run.

[Mick]

I have a few blocks of land in QLD that I will sell now, I can roll this money into a better property with income I feel.

Bought the blocks when the market was going well but it seems to have slowed down in QLD.

Given that they are blocks of land I was thinking of selling them myself? found these..

http:www.NoAgentsHere.com.au
and
http:www.noagentproperty.com.au

anyone used these before?

[Philip Thomas]

We have a mix of developer clients with some in the portfolio building / never sell category while others are strictly traders.

Both groups have done very well over the long term. And that’s the key “long term”.

Personally we’re in the never sell category, though sometimes that’s not feasible or appropriate.
Circumstances change & sometimes it’s more important to realise a profit & move on.

Many people argue: well look at all the taxes you pay when you sell & the stamp duty you paid when you brought? While this is true, the bottom line is that you ever go broke by marking a profit.

From my observations with our clients, the group that has created real long term net worth have certainly been the ones that have seldom sold. Some of their portfolios are staggering & broad.

Would you choose net worth over cashflow?

[Paul Morton]

Many advisors, books, etc, say that you should never sell your investment property. My thoughts are that this is not always true and you may actually be better off selling. For example, in my situation I would expect to have enough equity in my investment properties in 2 - 3 years to be able to sell them and pay off my own home and be debt free :D

This would then leave me in a position to invest what I was paying in mortgage repayments and / or purchase another investment property(ies) and have ALL my repayments 100% tax deductible.

Like they say, everyone's circumstances are different, etc, etc. but I think for most investment "GURU'S" to be saying never sell is poor advice.

I agree. Horses for courses my friend. :)

[francinemelbour]

I would probably invest in business real estate. Real estate is widely growing now specially in Australia many businessman there are into real estate now.

[Florencia2010]

If the building or the property is listed on a register of historic sites then you need to know what this means to the future of the property. Restrictions and limitations can be imposed on future property changes because of the heritage listing. This will add to the development costs and approval processes. If in doubt consult with the local planning approvals authority. If you have a property that is so affected or listed, then you will need an expert such as an architect to assist with the future considerations and costs for the property.


property for investment (http://www.sellpropertyfast.org)

[Mike_87]

Many advisors, books, etc, say that you should never sell your investment property. My thoughts are that this is not always true and you may actually be better off selling. For example, in my situation I would expect to have enough equity in my investment properties in 2 - 3 years to be able to sell them and pay off my own home and be debt free :D

This would then leave me in a position to invest what I was paying in mortgage repayments and / or purchase another investment property(ies) and have ALL my repayments 100% tax deductible.

Like they say, everyone's circumstances are different, etc, etc. but I think for most investment "GURU'S" to be saying never sell is poor advice.

I recently sold an investment property to begin developing in a better area. So I think it's wrong for anybody else to say that you should never sell an investment property, especially if there is bigger and better things to move onto in the process!

[R3aLEstat3]

You got some point there Mr. Simpson...LOL! anyway, it's not always that we are experiencing similar situations

[buyingahouse]

I think we all used to be told to buy and never sell which I feel is wrong. We should always have an exit strategy for a property and work that out even before we buy it :)

[Home]

I have had some property investments I had to sell because of my financial situation at the time. Sometimes you have no choice when to sell, when all signs are ponting in a particular direction then that direction is the normally the best one to take.

[Felix07Richerd]

I do both with my properties, I have 3 - 2 are through agents and 1 is self managed. I find that the work I put in is the same for all three and agents don't do much for me.

[Sell No Agents]

Everyone's circumstances are different, however I believe that if you need more money to achieve the next step in your life, try to refinance the property and use the equity in the property if you have any. This way you more than likely will gain greater capital gain in the long term by not selling.

I made a huge mistake by selling an investment property, thinking I needed the money for a business venture. It turned out that the business I purchased paid for itself in no time and the property I sold actually doubled in price not long after.

A bad decision on my behalf and I will be very careful next time.

[Ladyhawk]

Everyone's circumstances are different, however I believe that if you need more money to achieve the next step in your life, try to refinance the property and use the equity in the property if you have any. This way you more than likely will gain greater capital gain in the long term by not selling.


after reading further on this topic...i could not agree more.
think about how many people in your life - family members and friends, who've said 'i wish we never sold that house it's now worth $$$$...'

my husband and i are determined to hold onto our ip. it has doubled in value in five years and we can only see it increasing in value...

[PhotonSmith]

Many advisors, books, etc, say that you should never sell your investment property. My thoughts are that this is not always true and you may actually be better off selling. For example, in my situation I would expect to have enough equity in my investment properties in 2 - 3 years to be able to sell them and pay off my own home and be debt free :D

This would then leave me in a position to invest what I was paying in mortgage repayments and / or purchase another investment property(ies) and have ALL my repayments 100% tax deductible.

Like they say, everyone's circumstances are different, etc, etc. but I think for most investment "GURU'S" to be saying never sell is poor advice.

I slightly disagree with you on these. I would not aim to own my home 100% debt free. I'd rather use the spare cash to buy another investment properties.