Reasons to sell your investment property

There may be numerous reasons to hold onto an investment property, but just as many grounds to sell it. A long-term asset, such as a house, carries large risks and rewards at the same time. A good property investor will know when to keep the asset and when to sell it.

Investment properties should be held for five to ten years, at least, to allow the investor to study the market and gauge where it is heading. As the market shifts, the investor will be able to judge whether the property will end up being an asset or a liability.

There are several major reasons that lead property investors to sell their properties. Firstly, one of the most common reasons is a pre-planned exit strategy. Some investors will purchase a property with the aim of selling it once the market turns in their favour. They will sell the house for a profit and use the money for other investments or business ventures.

Some investors sell their property so that they can buy a better performing one, perhaps with modern features or in a better area. The new properties are likely to generate higher rental income for the investor.

Neighbourhoods and suburbs heavily influence the rental yield of an investment property. More affluent suburbs mean more rental income. However, like the property market, suburbs change over the years and sometimes they become run down, unsafe or overpopulated. This is when the rental yield drops and the investor ends up losing money on the property.

A property buyer with a large portfolio may decide to sell some of the properties to diversify their financial risks into other areas, such as listed equities. Alternatively, they could use the money for personal reasons and still have a few properties left over in their portfolio.

Sometimes, events happen that require large finances. Major personal shifts such as death, weddings or having children mean that a large amount of cash may be needed within a limited timeframe. A property investor may sell in order to get access to this necessary cash to pay for expensive personal events.

A good property investor will research the market thoroughly before buying. They will look at all eventualities and possible outcomes, weighing up the pros and cons. The decision to buy property is no small feat, and so it is important to know what to expect should the market not swing in your favour.

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Allow us to provide you with our expert knowledge on the Tokai, Kirstenhof, Bergvliet, Meadowridge area, ensuring you have the most accurate information and support when buying or selling your property. Contact us on +27(0)21 794 5252. We are here to ensure that you prosper through property!

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