Should I sell my investment property?
“Should I sell my investment property?” is a question that will likely be a serious consideration for most investors at one time or another, whether it’s a structured sell down as part of your property investment strategy, or because the asset isn’t meeting your expectations.
Here are 5 questions to ask yourself first to help ensure selling is the right move for your property investment strategy.
1. Does the property meet long-term investment criteria?
When using the buy-and-hold strategy to capture capital growth of a property, it’s important the asset meets long-term investment criteria. Investors need to consider the macro factors, such as population growth and employment prospects, as well as micro factors, such as local amenities and demographics, for example. It’s not uncommon for investors to start to doubt the quality of the property if it doesn’t rise in value as expected. Therefore, investors must recognise if they’re being impatient (and the property does meet long-term investment criteria) or if the property is likely to continue to under-perform.
2. Is the decision to sell being driven by temporary financial pressures?
A change in life circumstances, unexpected costs or a strain on your cash flow could create financial pressures that may lead you to reassess if holding an investment is the right decision. Before deciding to sell, it’s essential to determine if these short-term financial pressures can be alleviated by refinancing your loans or through budgetary adjustments, for example. Selling an investment property may end up costing you more when taking into consideration selling agents fees.
3. Is it a good market to sell?
The cyclical nature of property markets may mean that selling straight away might not be the best option. If the market is in a downturn it could be better to hold on to the property until conditions rebound or at least stabilise. Consider the conditions of the wider property market as well as the sub-market in which the property is located. Is it a seller’s market, or is it a buyer’s market?
4. Are there any opportunities to add value to the property before sale?
If you’ve decided the answer to “should I sell my investment property” is yes, then you’ll want to maximise your property’s value first. Tidying garden beds, applying a fresh coat of paint, installing modern blinds or laying new carpet are a few options that can rejuvenate a tired and ageing property. These types of cosmetic upgrades and add-value opportunities can help demand a higher asking price.
5. Are there likely to be changes to the property’s zoning?
If a property’s zoning is likely to be reclassified to allow for higher-density development, it might be worthwhile holding the asset to achieve a higher selling price. For example, a property that’s appropriately zoned for 4 dwellings is likely to be worth more than a property in the same suburb that is zoned for only single dwellings.