Those of us who have been in the property investment field for awhile, especially in Perth, have stories of the investor who sold their property right before the suburb shot up in value or the investor that hung on to a lemon for longer than they should have. Some investors seem to have the midas touch, buying at the right time and selling at the right time.
With baby boomers looking to start retiring and generation X & Y using their property investing returns to improve their personal wealth, there are many investors that will need to get the timing of their sale right. Here are some tips to to improve your chances.
How Long Should You Hold?
We recommend that investment properties be held at least 7-10 years so that you will at least see a full growth cycle. No property will constantly grow, it moves through a cycle of supply and demand and depending on it’s growth pattern it may grow rapidly in a short period time before going back to a neutral market or it may be more of a consistent performer.
We use price prediction tools to uncover the likelihood for future growth in a suburb. These tools are able to measure the underlying trends in buyer supply and demand, number of properties on the market, price discount to sell, days on market, renter supply and demand and put all this into an equation to then formulate a prediction.
Regardless of your investing strategy, if you look to buy in a suburb that is just entering it’s growth phase it will increase your chances for short term growth. An appreciation in value over the first 1-2 years of ownership is critical to help you expand your portfolio by drawing on the equity or protect your position against loss should you ever decide to sell.
When Is It Time To Sell?
There are many reasons an investor may decide to sell a property but the key here is to remain in control of the decision regardless of the circumstances.
At least once a year you need to look at how your property has performed. A simple way to do this is to get an appraisal for current market value from a real estate agent. You can then divide it by the purchase price and subtract one from the number and multiply by 100. This will tell you the percentage your property has risen during the time you have had it. You can then get a median growth rate for your suburb and other similarly priced suburbs in your metro area and compare them. If your rate is higher, then you know your property has been performing well.
Then look at what the current state the sale market is in (distressed, buyer, neutral, seller, boom) and where it is again predicted to go over the next year. If you can time your sale to be during a seller or boom market then you will get a premium price as buyers fight to secure it. Selling a property in a distressed or buyer market should be avoided at all costs. Having personally sold properties in both ends of the spectrum, this is the most important factor to get right!
Ask our property investment sale experts about other controllable important factors relevant to your specific property and situation, to maxime the profits on your investment property in Perth. Call 1300 472 427.