Last week I wrote about major life decisions people make during the summer holidays, focussing on relationships.
You can read New year, new decisions, new reasons for a conveyancer in your life here.
However, this week I’d like to share some thoughts about selling investment properties because relaxed minds over summer can sometimes be a little more cavalier than at other times of year.
Why people might list investment properties over summer
The two main reasons I have found that lead people to contact us in January to oversee the sale of investment properties are:
- Change in relationship status – separation or divorce, as discussed last week, can require investment properties held in joint names to be listed for sale
- New ideas and goals – the relaxing summer period can let long subdued desires and plans rise to the surface and demand action
The first of those scenarios was largely covered in last week’s article but the latter demands further reflection.
If you do decide to shift the focus of your assets or investment portfolio, please make sure you get good financial advice and also keep your conveyancer in the loop.
Selling investment properties is often an action of last resort
One of reasons I encourage further thinking before listing investment properties is that there are many penalties for selling such assets too soon or at a wrong time.
Selling investment property when the local market is not at its peak or not active enough can mean a loss will likely ensue.
And selling without the counsel of a trusted conveyancer can mean you overlook a raft of selling and transfer fees that can dent your outcome.
I am certainly in the camp that believes investment property typically offers the ideal vehicle for long term wealth creation and inflation-indexed income, so my position is that selling the property should always be done cautiously.
That said, there are legitimate reasons and times for selling, including:
- A peak market – prices at an all time high
- Even so called ‘dogs’ or low grade properties are selling (could be an opportune time for offloading similar stock)
- You’ve exhausted your depreciation – this gradually erodes over a period of 30 or 40 years with a new home
- Your property hasn’t performed – if you held a property for a long time and it has not achieved its goals, there’ll always be a time for cutting your losses
They are just some of the considerations I wanted to share by way of giving you some pause for thought over summer.
Naturally good real estate, financial and conveyancing advice will also give you firm foundations for your next property investment move, whether that be selling or buying.