Is It Time to Sell Your Investment Property?

Posted by Andrew Nicol on 16/02/18
Sell Investment Property

Successful property investment comes from making decisions that fit with your strategy. Here at Opes Partners, we usually advocate a “buy-and-hold” strategy, where investors hold properties for several years in order to reap the rewards of their capital gains as their values increase, while also bringing in the rental income.

We’re often asked if it’s a good idea to sell off a property in your portfolio that has increased in value, in order to free up capital to purchase more properties.

Beware of struggling markets

The question above is usually from investors who are thinking of selling a property in a strong market – for example, Auckland or Wellington – in order to buy several cheaper properties in the provinces. The idea being to get out of the million-dollar house market and spread risk across several properties. On the surface, this sounds like a great idea.

However, you need to bear in mind that not all markets perform the same. Several $200k homes in a provincial area will not see gains at the same rate as your $1 million house in Auckland. Beware of selling off properties in well-performing areas to buy into markets that may be stagnant or declining.

Buy for growth

The actual sale price of the home isn’t the only consideration. Buy-and-hold is a growth strategy, which means you need to prioritize the properties and areas that will help you facilitate that growth.

Investors with larger growth portfolios have access to amazing opportunities, including buying shopping malls and industrial buildings – that other investors can only dream of. If you want to get to this stage, then selling off a high-performing property may be a backwards step.

Unlocking equity

There may be another reason you wish to sell off an investment property such as unlocking equity to start a business or improve life for your family.

Remember that once you sell off that property, it – and all its potential future gains – is gone forever. In most circumstances, we believe it’s important to hold these properties if possible, but it all depends on your strategy and what works for your family.

If you’re thinking about selling off an investment property, or looking to consider your next steps, then contact the Opes team to discuss your options. We can help you tweak your strategy and figure out a course of action that works for you.