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How Is Your Property Investment Performing?

When your investment property fails to deliver the returns you so eagerly awaited, you need to decide what to do with it. Sit on it for a while longer, or sell it and move on?

When your investment property fails to deliver the returns you so eagerly awaited, you need to decide what to do with it. Sit on it for a while longer, or sell it and move on?

First, you need to figure out why the property is underperforming in the first place. Is it because the property is in disrepair, in a poor location, or not earning enough rental income? Perhaps it has been sitting vacant for a while because it is not desirable to potential tenants.

The solution for this is somewhat simple - fix what needs mending and find a tenant.

If this is not something you can afford or want to do, then it may be time to sell the investment property to free up borrowing power and reinvest elsewhere.

Investors who are thinking about selling should first assess what went wrong before selling and not making the same mistake again.

It’s important to understand why the property was underperforming before cutting your losses and moving on. Although you will be selling to essentially reinvest, you may need to revisit your investment strategy before making the same error twice.

Investors selling their underperforming properties should perhaps rethink their choice of suburbs, what type of property they purchased and assess if it was desirable enough to the market.

It’s important not to become emotional when assessing investments. If the property is not performing – sell it and move on.

Investors also need to consider the financial side of selling such as selling agent fees, stamp duty costs and capital gains tax.

Although the total cost could equate to a financial loss and potentially going backwards for a couple of years, selling an underperforming investment property and moving on could still be a better long term option.

 

DISCLAIMER:This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.