Timing is a factor that can determine whether a rental property is sold or retained, but it is not the sole factor.
It's possible that you want to get rid of your debt, that the lease on the apartment you rent is coming to an end, or that you're just ready for a change.
No matter what the reason may be, it can be tough to pinpoint the precise time when it is best to sell your rental property.
Because of the frequent ups and downs that the market endures, it is difficult to determine when the next boom will take place. Nobody wants to find after selling their rental property that they missed out on a 7% growth rate for the year, which is exactly what is happening in the regional market in Australia right now. Nobody wants to make that mistake.
We offer some suggestions that can help you decide if it is the right moment to sell your investment property or to keep it.
Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing team@klearpicture.com.au.
4 Signs your investment property is ready to be sold
Although an investor often holds onto their property for 7 to 10 years, this is not a hard-and-fast rule.
Here are four indications that the current moment is an excellent one to sell the investment property you currently own:
- You have a rental property in a market that is stagnant or falling.
- You just retired or started a part-time job.
- Despite being negatively geared, the property's value isn't increasing.
- There are other investing options available that you should put your money into.
Examine each of these cues in further detail.
1. Future market growth is minimal to nonexistent
You might want to sell if your investment area's real estate market has reached a long-term plateau before things become worse.
You may tell if this is the case by looking at the area's greater vacancy rates, the area's or suburb's stagnant population, and the general mood.
To monitor these data, we advise looking at CoreLogic Housing Updates and SQM Property Indexes.
2. You recently retired or switched to a part-time schedule
There is a proper period to plant seeds as well as a proper time to gather the crop. When you leave your job or see a reduction in the amount of work you have to do, it is definitely time to start cashing in on the benefits of the property you have been holding on to.
This holds true even more so if the rental property you own is one that generates a negative cash flow. If the costs continue to rise to an unacceptable level, you should consider selling the business.
Obviously, a great deal will be determined by the goals you have set for your finances. If it is a favourably geared rental property and you are prepared to live off the money, then it is acceptable. Having a plan, on the other hand, for when it is time to sell the house and start making some money will be of great assistance to you in this endeavour.
Additionally, this change in circumstances can provide you with a fantastic opportunity to sell. You won't be obliged to pay as much capital gains tax because you have less or no taxable income (CGT).
Selling your investment property when you're not working full-time allows you to keep more of the money you make because CGT is the government's tax on the profit (or capital gains) you've gained from it.
3. Your investment property is negatively geared and not performing properly
In spite of the extensive study you conduct before to making an investment in real estate, there are times when the rental properties you purchase do not perform as well as anticipated. If you are experiencing a loss in income and the value of the property is decreasing, it is time to consider selling, particularly if the market appears to be stable.
4. Better investment options have come to light
We play the real estate investment game to boost capital profits, therefore it's best to take advantage of any opportunities you come across to do so.
Doing your homework should be your top priority. It is important to keep in mind that the process of buying and selling a home involves a number of costs; therefore, you should ensure that the flip will result in a long-term profit.
The ATO also offers great guidance regarding tax deductions when selling a rental property.
Three situations in which you ought to keep the rental property
To know when to hold requires talent, and having that skill is really necessary.
It's possible that the short-term benefits of selling your investment property will be outweighed by the long-term benefits of keeping it. Here are a few signs that you should keep your cool and remain true to your beliefs in order to avoid any unnecessary conflict.
1. You just recently purchased the property
If you've only had possession of your investment for five years or less, selling it could end up costing you more money than it's actually worth. You are probably aware that there are major costs associated with purchasing a property, and you should also be aware that there are comparable costs associated with selling a home.
When you sell your home, you may incur a number of expenditures, including commissions paid to your real estate agent, home upgrades, costs associated with the closing process, and advertising expenses (we could go on). We strongly recommend that you should not sell your home unless you are very positive that you will be able to realise capital gains from the sale. This will ensure that you do not have to take a loss on the transaction.
Check out ANZ's thorough list and price breakdown for selling a property.
2. Your property is well-located and generating income for you.
This may appear to be self-evident, but occasionally a halt in market activity can mislead investors into believing that they need to liquidate their holdings. If your home is located in a thriving neighbourhood, you have no trouble finding renters for it, and its value has increased since you purchased it, there is no reason to consider selling it.
Even though it would be more convenient, we'd rather limit the risk to ourselves and stick with the tried-and-true method in order to improve our financial stability.
It is going to be much more challenging for you to sell a rental property while it is still being used by tenants, so if you already have good ones, it is in your best interest to hold on to them. Do not lose sight of the fact that the value of your property will rise steadily over the course of many years; the focus should not solely be on short-term profits.
3. You're bored with your current home
We already stated that you should seize any better investment opportunities you come across.
Having said that, you should refrain from simply seeking novelty. We frequently witness real estate investors give up on a wonderful property in favour of something more novel and interesting.
On the other hand, if your rental is boring you, that's a pretty positive sign. It simply indicates that everything is smooth, steady, and trouble-free. Therefore, avoid shaking it merely to shake it.
Real Estate Professionals and Newsletters You Should Read
There is no denying that the era of the blog is here. Any property expert, whether self-declared or recognised by others, is able to broadcast their real estate expert advice online.
It might take a lot of time to sift through the noise to discover the right (and trustworthy) real estate blog, so we did it for you (thanks!).
The experts and property research newsletters listed below are some of our favourites in Australia, appropriate for both beginners and seasoned pros in the field of real estate investing.
5 Real Estate Professionals to Follow
Let's start with the Australian real estate professionals and blogs you should be reading.
1. Michael Yardney
Michael Yardney's Property Update blog has been around since 2001, and in that time it has won a number of honours, including the title of Feedspot's Most Popular Property Blog for four consecutive years.
Because it covers such a wide variety of issues, both novice and seasoned investors will find something useful on this website. Because of this, it is a wonderful resource for you.
Michael is an excellent all-arounder; in addition to hosting a podcast about real estate investing, he is the author of nine books and contributes articles on a consistent basis to Smart Company and the New Zealand Property Investor Magazine.
2. Helen Collier-Kogtevs
Helen and her boyfriend Ed were able to retire with a sizeable property portfolio thanks in large part to their determination to transmit their newly learned expertise to others, which led to the founding of Real Wealth Australia.
The Property Portfolio Formula Course offered by Helen is an excellent resource for those who have made the decision to invest in real estate but are unclear how to get started.
If you are not in the mood to read, Helen also has a number of property investment podcasts, and her website has some fantastic introductory films. If you are interested in learning more about property investment, visit Helen's website.
3. Doron Peleg
You should model your business decisions after those of Doron Peleg, who has more than 20 years of experience in the field of real estate investing.
His company, Riskwise Property Research, is an excellent resource for developing risk assessments for the investments you might make in the future.
You can keep up with Doron's smart pieces on Linkedin, where he frequently publishes content that places a strong emphasis on statistics and risk assessment. These articles can be especially useful for experienced traders and investors.
4. Margaret Lomas
Margaret Lomas is a well-known figure in the field of real estate investing due to her status as a best-selling author, TV host, and the person who founded Destiny Financial Solutions.
You are strongly encouraged to read her book, "20 Must Ask Questions for Every Property Investor," in the event that this is your first foray into the world of investing and you are searching for some expert guidance.
5. Dymphna Bohol
Her portfolio of properties in other countries, which is worth several millions of dollars, is evidence of Dymphna Boholt's professionalism in the industry.
Her I Love Real Estate blog is worth reading if you want to remain up to date on recent changes in Australian real estate, and she offers a number of programmes that are ideal for beginner investors.
Newsletters on real estate studies that you should be receiving
If you are looking for more specific information, you may check out our blog where we frequently post new information and our thoughts on the state of the real estate market.
If you want extra newsletters to be sent to your email as a supplement, there are a number of fantastic newsletters that you may choose from. Keeping up with the stock market with this strategy is a terrific way to do so.
The following is a list of some of our very favourites:
1. SQM Research
SQM is the place to go if you are looking for particular information regarding a piece of property.
They provide access to a vast array of free and premium data, including demographic statistics, rental yields, auction results, and sold records, amongst other things.
In addition, they have the possibility of making a bespoke data request in the event that you are seeking for something exceedingly specific for your new rental property.
Market remarks from real estate specialist Louis Christoper are included in SQM's free weekly newsletter, in addition to updates on the company's most recent data results.
2. CoreLogic
You should subscribe to CoreLogic if you are interested in learning more about the predicted yield and cash flow of a property as well as if you want to keep track of current investment hotspots. CoreLogic, much like SQM, provides you with vital information to assist you in making the right choices for your situation.
To gain access to CoreLogic's data packs, you are required to purchase a premium membership, which comes with a variety of membership length options ranging from one week to one year.
Someone who is new to the field of investing in real estate would benefit greatly from purchasing this pack because it has a comprehensive list of both the positive and negative aspects of the potential property they are interested in purchasing.
In addition, they provide a free weekly email known as Property Pulse that keeps you up to date on the latest news in the real estate industry as well as the research that CoreLogic has conducted on residential properties. We strongly recommend that you do it.
3. Australian Property Investor
In spite of the fact that our previous two websites also provide access to a significant amount of data and analytics, Australian Property Investor covers a great deal more news, case studies, and interviews with industry professionals. Subscribing to the weekly email that professionals in property investments produce is an excellent approach to maintain one's awareness of current events pertaining to the real estate market in Australia.
We believe that becoming a member of API, which is completely free of charge, is beneficial since it grants you access to a variety of beneficial services, such as tax and finance calculators, in addition to providing you with invites to events, conferences, programmes, and real estate expos.
But are "experts" in real estate actually reliable?
The short answer is "yes" and "no" simultaneously. Those who have a demonstrated history of success in their industry are almost certainly well-known within that industry. However, specialists always have a very wide perspective, and because of this, they are unable to provide you with the kind of in-depth analysis that is necessary for you to make a prudent investment in your specific circumstances.
It would be to your advantage to routinely integrate the results of your investigation with the recommendations of professionals. Real estate professionals are a terrific resource for getting up to date with the latest news and trends; however, this does not mean that one should blindly accept their advice.
Always be sure you supplement professional advise with your own in-depth study and analysis. Never just go along with what they suggest.
The fact that there are so many real estate experts available on the internet is, on the one hand, a boon and, on the other, a bane. It is possible that it is tough to know where to begin; thus, it is possible that our list has made it simpler for you to close your tabs.
On our property blog, in addition to the most recent real estate news and market updates, you'll also discover useful tips and direction for maximising the profits from your investment property. These may be found alongside the most recent industry news.
Have fun reading!
Podcasts for real estate professionals
The pace of life is picking up for everyone, including ourselves. We put in longer hours at work, spend more time with our friends and family, and have far less time to ourselves than we used to. Our limited spare time is frequently taken up by activities such as travelling to and from work, exercising at the gym, walking the dog, and driving.
It is to your advantage and can lead to profitable investments if you stay abreast of what is going on in the real estate market. This is true regardless of whether you are a property investor with a long-term perspective, are just considering dipping your toe in the water, or are somewhere in between. It takes a significant amount of time. It may be difficult to find the time to read the news, blogs, and keep up with trends happening all around the world.
Using podcasts to make the most of our time by ourselves is a simple way to maximise its potential value. These bite-sized pieces of information often range in length from twenty minutes to an hour and focus solely on a single topic. We have gathered a list of our favourite podcasts regarding real estate investing to spare you the time of searching for them:
The Smart Property Investment Show
Phillip Tarrant, director of Smart Property Investment, has a wide range of conversations with a variety of persons working in the real estate investment market. Visitors range from demographers to politicians, and each week, they discuss a new topic during their time there.
On Property Podcast
The podcasts that Ryan McLean releases on a consistent basis are condensed, straightforward, and go right to the point. He discusses a wide variety of topics, including finances, where to invest one's money, house upgrades, and many others. You may get your daily dosage of real estate-related motivation from the on Property podcast, which is typically between 10 and 20 minutes long and is broadcast five times a week. This is an excellent way to get your real estate motivation fix.
Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing team@klearpicture.com.au.
Real Estate Talk
Real Estate Talk is a podcast that airs once a week and is hosted by Kavin Turner. Each episode features a different group of speakers on the panel. In the course of the approximately forty-five minutes, numerous real estate investment strategies, pieces of advice, and recent events are discussed. The Real Estate Talk podcast is known for making extra content easily accessible on a regular basis.
Quit the 9-to-5
The Quit the 9-to-5 podcast is geared towards people who want to make a living from their real estate assets and are the target audience for the show. Each episode features a discussion between Ben Handler, the Chief Executive Officer of the Buyers Agent Institute, and an accomplished professional whose successful career path includes real estate investing.