Property Advice

7 reasons to sell your investment property

Private Property South Africa
Press |
7 reasons to sell your investment property

Knowing when to sell or hold an asset is a crucial part of investing. With investment property, a number of factors will influence your decision. Here’s what you should consider.

A decision to sell a long-term asset such as a property can sometimes be a challenging decision for an investor, more so for a novice investor.

Every property investor will be confronted with this question at some point in their investment journey. Therefore, knowing when to sell or hold your investment property is essential when building a portfolio,” says Praven Subbramoney, CEO of Private Bank Lending at FNB.

“Due to the long-term nature of the property investment journey, the general rule is that property should at least be held for five to ten years to allow the investor enough time to study market conditions and further assess the viability of their portfolio,” he adds.

7 reasons why investors end up selling their properties:

  • Exit strategy – some investors venture into property having already developed an exit plan, which consists of selling the properties and using the funds for alternative business interests.

  • Recycling equity – this involves selling a property and using the equity to buy a better performing one. When going for this strategy, it is essential to take into account the costs involved in selling and acquiring a new property and whether the returns will be better in the long-term.

  • Poor performance – if a property fails to provide good rental yield and capital returns for at least five to 10 years, it may be considered to be performing poorly and eventually sold.

  • Diversification – property investors may sell some of their properties to unlock capital and diversify their financial risk into another asset class, such as listed equities.

  • Deteriorating neighbourhood – selling property due to unfavourable changes in the neighbourhood is common for inexperienced investors who did not conduct proper research when acquiring the property.

This could also have been the investor’s former place of residence, which they decided to rent out after moving out.

  • Life changing events – major life changing events like getting married or having children may lead investors to sell their properties and seek a new direction in life.

  • Market timing – new investors who do not adequately understand how the property cycle works may be tempted to sell when market conditions seem unfavourable.

“There are many circumstances and underlying factors that may lead you to consider selling or holding your investment property. The decision should ultimately be based on your current circumstances, investment strategy and what you aim to achieve,” concludes Subbramoney.

Related Articles

Atlantic Seaboard’s BIG FIVE suburbs head to R20m ave selling price
Press | 12 Feb 2018

Atlantic Seaboard’s BIG FIVE suburbs head to R20m ave selling price

The average selling price of a home in these Cape Town suburbs has surged past the R15m mark!

Trendy Salt River apartments from just R1.295m
Press | 27 Feb 2018

Trendy Salt River apartments from just R1.295m

Salt River is experiencing huge amounts of interest due to the lifestyle, location and relative affordability it offers homebuyers.

German investors maintain strong interest in South African property
Press | 12 Jun 2018

German investors maintain strong interest in South African property

Keen interest shown at an international event in Hamburg has revealed that German investors have a healthy appetite for South African real estate, especially for retirement properties.

sample image of property alerts

Get instant property alerts

Be the first to see property alerts for your area.
;