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Investing in property can be a tricky business that needs you to know when it is time to invest and when it is time to let go of property that you own. With current property climate showing a decline in dwelling values and stricter borrowing criteria from major lenders, when is the right time to invest or sell? Here are five handy tips to know.
For the novice in property investment
If you are just starting out in property invest, researching and seeking advice from other people who have been in the business longer than you have is a good place to start. If you have researched the property market you have invested in prior to purchase, you will have a good understanding of its trajectory. You need to at least hold onto the property for 5 to 10 years to assess its viability before rushing to sell.
It is costing you
This might seem as a no brainer, but it can be hard to let go of property that you have taken the time and money to invest in. One of the indicators that you need to consider selling is if the dwelling values fall rapidly over the years. The rental yield is also a good indicator of whether you should continue holding on or let go. If the property fails to provide a good rental yield and capital returns in the 5 to 10 years you have owned it, you will have to consider letting go of it.
Know the market cycles
If you are still in the beginning phases of property investment one of the things that can guide you through the process of deciding to hold on or sell your investment property is knowing how the property market cycle works. It is vital that you understand that the market fluctuates at various points in time. Selling because the current market climate is unfavourable can be a mistake that you could regret. Always keep in mind that there are various property markets in Australia, and you need to assess your investment based on the area in which you have purchased your property in.
Sell to invest in a better performing property
It is possible for investors to sell their existing property that is not performing well or to free up capital to invest in other property that promises a good return on investment. However, you will have to consider the time and cost it will take to do this and whether this will be beneficial for your finances in the long run. It will be financially sound for you to sell once you know that this will be better for you financially.
Always have a long-term plan
To build a solid investment portfolio takes time, but it also thrives on strategy. Not having a strategy in place in terms of how you will deal with the fluctuation in the market, how you are going to sustain and grow your investment if you are not planning to sell, and an exit strategy if you are planning to sell can be a financial mistake you can make. Always keep the long term goal of your investment in mind and how you want to grow these into possible alternative business interests.
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