The Three Golden Rules of Selling an Investment Property

by | May 14, 2021

Rules are an important part of life. And rules in most cases, are really just another word for common sense. They give us a clear framework around many important aspects of life, so it’s no surprise when it comes to selling your investment property, there’s a number of rules you need to follow in order to get the best result. 

If you want to know when to sell an investment property, or even if selling an investment property is a good idea, all you have to do is read the rules.

 

RULE #1 LET YOUR PROPERTY DO ITS JOB

Property investment is not the same as property developing or buying, fixing up and flipping properties. They’re different wealth propositions, so you need to be clear about what being a property investor actually is. Without that knowledge you might be expecting the wrong outcome from your investment properties and be selling when you should be holding.

Investment properties are a way to create passive income, i.e. money in your pocket that you haven’t worked for. The way investment properties create income is through rent incomes and regular increases in rental rates. 

Another way investment properties create wealth for investors is to increase in capital growth. While we may not be able to live off that growth, we can use it by extracting equity out of properties and using that cash to buy another property, thus creating another rental income.

Investment properties also provide investors with various tax deductions, which again while we may not live off, we can reap the benefits of those savings.

In short, if your property isn’t holding you back, if it’s generating passive income and has given you back any deposit amount you paid in at purchase, it’s doing its job. The property is providing you with passive income and asking very little, or anything at all, from you. So hold onto it and leave it alone.

 

RULE #2 QUIT THE COMPARISON CONCEPT

If you’re a few years into your property investment journey you may have a number of properties. Hopefully you’ve followed some of the other rules of real estate investment and you have properties in various locations, some houses, some apartments. Each property will be working in its own specific way. Perhaps some of the properties have multiple tenants and create more than one income stream. Perhaps some are in place economies and are attracting renters who are willing to pay top dollar just to reside in that post code. 

The rule here is not to compare apples and oranges. A property that is split in two and gives you two incomes, may not be increasing its capital growth as fast as say an apartment in a place economy. But remember rule number one – you need to let each property do its job. Your duplex is creating more than one income stream – huge tick for your cash flow. If it keeps doing that, and you’re able to regularly increase the rental rates, why does it need to double in capital growth as fast as another property? Remember capital growth is a vanity metric. It might be nice to say your property has doubled in value, but you’re not living off that growth, so quit comparing and appreciate what’s working.

 

RULE #3 THINK BEFORE YOU SELL

Ask yourself why you want to sell. If it’s because you aren’t seeing the capital growth you’d like? Refer to rule two.

If however, you aren’t seeing the rents you want, and are having to top up the mortgage out of your own pocket, you still need to stop and think before you decide to sell.

Ask yourself what is stopping rent increases. Is it something that can be fixed? Would a new kitchen and bathroom, air-con or granny flat in the garden, be the golden ticket to higher rent rates? Ask yourself if you can improve the property’s ability to attract higher rents and weigh the costs of those improvements against the next 15-20 years of rental income.

Buy well, never sell, is a motto successful property investors live by. The costs and tax involved in buying and selling properties can be significant, so selling too fast will eat into any wealth from capital growth you may have seen. 

 

LEARN THE RULES THEN PLAY THE GAME!

Let the experts at Positive Real Estate teach you about the buying and holding technique of property investment at one of our free property investing seminars

Sign up for one of our information and education events, where you’ll be equipped with the tools, resources and support to thrive, and not fall behind on your path to financial freedom – whatever that may look like for you. 

Book your spot now and find out what you need to know about the current market landscape and how you can make it work for the ultimate wealth creation opportunities. 

 

Book here.

Click here to like us on Facebook and see more updates like this.

Hey there, do you enjoy the Positive Real Estate Blog? If you did, why don’t you book into a Property Information Night in your area and get more information from our team. You can do so here.

Best of ’21 #3 Why 99% of People Fail In Real Estate

Welcome to the BEST of ‘21 series on the podcast! This is week 3 of my four week holiday – and I can’t wait to bring to you my predictions for 2022 in the coming weeks. For now, here’s one of the most downloaded episodes of 2021.

Only 1% of people really succeed with real estate investing. So why do 99% of people fail – and what do you need to do to ensure you’re not one of them? If you own real estate already, today’s show just might burst your bubble. We explore property management and reveal what type of buyer you actually are. Nobody really wants to own anything, because when you own something you have to be accountable for it. So in this episode, we will talk about how to navigate the property owning journey. Because often the conversation in real estate is centered around buying and selling. But what about the big part in the middle? Welcome to Episode 78 of the Urban Property Investor!

From Renting At 16 To 3 Properties By 25 with Laura Chugg

Laura Chugg first started paying rent from the age of 16. Ever since then – out of necessity to begin with – she’s been magnificently obsessed with managing money smartly. From the early days of earning $5.88 per hour to now coaching and helping people invest in real estate, Laura has seen a wave of change and growth. With investment properties in her portfolio that have quadrupled in value (buy well never sell), and a raft of lessons learnt along the way, Laura shared with us some of her most powerful Property Investor Tales.

Best of ’21 #2 The Secret Language of Real Estate

Welcome to the Best of 2021 – Urban Property Investor style! Today’s episode – the Secret Language of Real Estate – was the SECOND most listened to episode in 2021, and it’s a doozy!

There is a secret language to real estate that most investors do not know. Knowing that most real estate is not worth touching, how do you then listen to the “secret language” of properties that are desirable. This episode explains this secret language so that you buy desirable real estate that will not only provide quality housing to people, but help you crack the code of real estate. Enjoy!

Cleaning Up a Messy Portfolio with Rose Pengilly

Rose Pengilly had done a lot of real estate investing before getting professional coaching with Positive Real Estate. In her own words, Rose felt like “a bit of a mess” with “no real plan”. “I was just doing my own research and I didn’t have any professional coaching.”

Rose shares the challenges of a messy portfolio, and also the challenges of cleaning that portfolio up. After purchasing three pieces of real estate in Brisbane, Sydney and Melbourne, Rose shares the anxiety and lessons from her experiences.

This is an incredibly honest and real conversation from a successful property investor, and one that anyone – beginning, intermediate or advanced investor – will be able to relate to in one way shape or form.

Best of ’21 #1 How To Borrow More Money & Master Finance

Welcome to the BEST OF ‘21 series for the Urban Property Investor!

Episode 33 was THE MOST DOWNLOADED Episode of 2021 by far. You voted with your earbuds! So if you’re new here, this is the one that everyone wants … and if you’ve already listened – then I reckon you’ll pick up some more nuggets the second time around.

Here’s what I said at the time –
Do you want to beat the banks at their own game? In this episode, I want to show you how to master financing your property portfolio. Yes, finance is the key to capital, and the more you can borrow sensibly, the faster you get to crack the code of real estate wealth.

From Low Income Single Mum to Investing Queen with Carolyn Weston

Carolyn Weston has always desperately wanted to invest in real estate. Growing up in a modest family, she didn’t believe that hard work would necessarily be enough to create wealth. In her marriage, she was constantly rebuked for wanting to invest. After separating, her low income, marital status, and two young children made it extremely difficult to get a loan. But that didn’t stop her.

Not only did Carolyn make some incredibly tough decisions in order to enter the investment market, she has stuck to the task for over 10 years to the point where she is now one of our coaches at Positive Real Estate. A single mum who couldn’t afford becoming a client of PRE to begin with, to now being one of our team and a mentor and coach to so many Australians who enjoy the riches of Carolyn’s experience.

My 2022 Real Estate Predictions

This is the last show of 2021, and what a year it has been. We had lockdowns, vaccinations, hysteria, and massive changes in the real estate market. And now we are left in a pretty bizarre place as real estate investors as we go into 2022. So what can we expect from the upcoming year? That’s why we are dedicating the final episode of the year to 2022 predictions.

2 Properties in 6 Months at 31 with Melissa Cowan

Melissa Cowan is 31 with two investment properties. After buying her first IP off the plan, she very quickly purchased her second. How did she do it? It’s a great story of risk management and understanding your threshold for stress. So many of my previous guests have said “I wish I started investing earlier” – well here is that investor – and what a great story it is.

Once you’ve listened to this episode, I’d love it if you hit the subscribe button so you get notified every time a new episode drops.

13 Ways To Create More Cashflow

This is the Christmas edition of the Urban Property Investor. Is your portfolio set up to handle market kryptonite? On this episode, I discuss 13 ways to get more cashflow. From spatial transformation to hotelification, this episode will get your imagination buzzing over the Christmas period. This is one of the best lessons I can possibly teach you, so I am giving it to you as a Christmas gift, whilst I’m swimming with turtles on Lord Howe Island.

Buying The Wrong Properties & Still Winning with Dani & Craig Skinner

Dani & Craig Skinner have an incredible life and investing story to tell. Dani was born in Ghana and grew up in Zimbabwe, and met Tahree-born Craig in Newcastle before they courted in Sydney, got married, and moved to Brisbane.

Before I knew of Dani and Craig, they had already purchased four investment properties. But they weren’t happy with their portfolio, which was a mix of older real estate in low performing areas. But having the wrong type of real estate didn’t stop Dani and Craig from keeping their eyes on the prize. Having felt like the bank “owned” them, Dani and Craig transformed their portfolio into higher performing assets and now have a sensational range of assets that is helping achieve their family, financial and lifestyle goals.

You can’t help but be inspired by this power team. Enjoy!