The Complete Zeitgeist | S is for Resales | Selling your Investment Property
At the core of an investment property strategy will be the liquidity of the asset and that it should always have a value on the open market and be attractive to both investors and owner-occupiers.
The exit strategy, whether the property is flipped – bear in mind possible restrictions on assignment in contracts with some developers at the point of purchase; sold soon after purchase to realise short term investment aims, or held for five years or more to reap the mid to long term benefits of the asset, depends on your own vision for the individual asset and the overall aim for your portfolio, and various market factors that potentially influence individual decisions.
Things to consider when selling your investment property:
You’ll need to factor in the costs of selling and tax implications in selling your asset. Agents and legal fees should be deducted from any potential returns, along with Capital Gains Tax. Ensure this stacks up against your returns. It might make more commercial sense to hold.
Does the yield long term stack up against selling now?
The squeeze on supply vs demand means that essentially, rents will hold or increase and so the long-term yield may offer a stronger capital benefit, depending on your investment strategy.
Consider the capital appreciation; the increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates.
Re-investment is another important consideration. Are you freeing up capital from your portfolio to invest quickly in other projects or other areas? Exiting ahead of a five or ten-year plan and investing in another area quickly might deliver a stronger return.
Timing is crucial. Availability and demand for stock in the area will be a determining factor in the appraisal and its overall saleability, particularly where realisation in a shorter time is more of a focus. Whether or not your asset is currently tenanted or in a void period will also be a consideration.
The Complete Zeitgeist 2017
The zeitgeist compiled by leading global residential asset investment specialists Complete Prime Residential is a creative, insightful and thought-provoking collection of concepts in residential real estate investment and management of your properties. Providing an A-Z of all things real estate in the spirit of now get your own copy of the Complete Zeitgeist 2017 now.