Here’s a hotly debated topic for you.
Should you ever sell a property?
There’s merit in never selling an asset which goes up in value.
But does this idea stand up to closer examination?
Of course, selling for the wrong reasons is a mistake.
And novices do it all the time. They see a bit of equity in there, and they flog it for a quick buck.
The school fees get paid, a new car turns up in the driveway and the family go on a big holiday.
But the property, along with a great investment is gone forever.
It’s not a strategic move. It’s a move made in the absence of a strategy.
But on the other hand you’ve got people who insist you should never, ever sell a property under any circumstances.
And I mean ever. They’ll die defending this position.
Of course I get it. They know house prices keep rising over time, and over time you’ll miss this growth.
But here’s the interesting bit.
Successful Investors Sell Their Properties
Successful investors don’t cash in to make a quick buck.
But they certainly sell from time to time.
Here are three circumstances where selling a property makes sense.
Switching From Growth To Cashflow
One of the major goals for the majority of our investors is passive income.
There’s no point being rich on paper if you never get to enjoy the rewards.
Most strategies start with growing your asset base. And this means investing in high growth properties, then recycling the equity into more investments.
This is how our Master Facility works, and I’ll let one of our Property Wealth Planners walk you through this.
(Enter your details at the bottom of this article to get started).
However, at some point you’ll favour income over growth. And this might mean selling some of your portfolio to pay down debt, and maybe invest in higher yielding property.
The result?
Less money going out on interest, and more money coming in from rents.
Take Gary, one of our clients as an example.
Gary has accumulated over $1.5 million in capital growth, and when he was nearing retirement, we switched his portfolio from a growth focus to a cashflow focus.
This meant strategically selling some of his properties to generate income, which was part of the plan we created with him when he came on board.
He also owns two of these properties in his superannuation fund, so he can make the most of some tax benefits too.
And it meant he could achieve his goal of retiring in Thailand, which he’s enjoying right at this very moment.
Now if we didn’t do this, he’d be getting richer on paper, but without the extra income he’d still be doing manual labor which has taken a huge toll on his body.
A New Location
Another reason might be that you’ve invested in a property which went up like crazy in the first few years. But now, the area has matured and growth has stagnated.
Does it make sense to hold onto it?
Or do you sell it and invest in a new area?
And potentially use some of those surplus funds to pay down your mortgage?
Sometimes it can be a good move, even if it means paying some tax. You’ll still end up well ahead in a few years’ time doing this.
This is why we review our clients’ positions every 6 – 12 months and look for opportunities to accelerate your journey this way.
You Need The Money.
What if you need the money?
I mean, really NEED it.
Maybe someone in the family is sick, and you need to stop working or you have medical expenses or have to modify your home.
This person might even be you.
Or you lost your job, you’re not finding it easy getting another one and you’ve still got a mortgage and bills to pay.
Then yes, sell one of your houses.
Maybe even 2 or 3.
And be thankful you had something up your sleeve. If you didn’t, you’d be in real trouble.
What Could This Look Like For You?
By now you can see why selling some of your properties can make sense.
Of course, you wouldn’t typically sell all of them.
But you will probably sell some over time as a strategic move, especially as you move into a cashflow phase.
You’re invited to spend some time on a Google Meet with one of our Senior Property Wealth Planners to show you how this might look for you.
And why it’s smarter than the ‘never sell’ mantra which some swear by.
They’ll help determine your ability to replace your income or pay off your mortgage by investing in real estate.
They’ll map out an overview of what you should do, and when.
And of course answer any questions you have.
There’s no cost for this either.
We do it in the hopeful expectation that if you decide to invest, you’ll ask us how we can help you.
No obligation, no pressure.
First things first.
Enter your details below, and we’ll contact you to book in a time.