Whether you should sell or keep a rental property is a matter of timing, but not timing alone.
Maybe you’re looking to pay off debt, your tenants’ lease is about to run out, or you’re just feeling ready for a change.
Whatever the reason, it’s not easy to decide if it’s the right time to sell your rental property.
The market is full of ups and downs, and it can be near impossible to foresee when the next boom will be. Nobody wants to sell their rental, only to find out they missed a 7% growth rate for the year, like the regional market in Australia is seeing now.
To help you decide whether it’s time to sell or keep your investment property, we’ve got some advice for you.
4 Signs it’s the right time to sell your investment property
An investor’s average time holding onto their property is 7-10 years, but don’t treat this as a rule set in stone.
Here are four indicators that now is an excellent time to sell your investment property:
- You’re holding a rental in a stagnant or declining market
- You’ve recently retired or started working part-time
- The property is negatively geared but isn’t growing in value
- There are other investment opportunities out there you’d instead stick your feet in
Let’s dig into each of these cues.
1. The market has little to no potential for future growth.
If the area that you’ve invested in is at a long-term property market standstill, you may want to sell before it starts to decline further.
A way you can know if this is the case is if the area sees higher vacancy rates if the population in the area or suburb is stagnant, and how sentiment is.
2. You’ve recently retired or have changed to working part-time
There’s a time to sow, and there’s a time to reap. Upon exiting or seeing a reduction in your workload, it’s likely a time to collect the benefits of the property you’ve been holding.
This goes doubly if your rental is a negatively geared property. The expenses may be hard to keep up with, and you’ll be better off selling.
Of course, this will depend a bit on your financial goals. If it’s a positively geared rental and you’re happy to live off the rental income, that’s fine. But it would help if you had a plan as to when it’s time to sell the property and live a little.
Plus, this change in circumstance may be an excellent opportunity for you to sell. As you have less or no taxable income, you won’t be required to pay as much Capital Gains Tax (CGT).
CGT is the government’s fee on the profit (or capital gains) you’ve made from your investment property, so by selling while you’re not working full-time, you get to keep more of what you’ve made.
3. Your investment property isn’t performing well and is negatively geared
No matter how much research you do before investing in property, sometimes rental properties won’t perform as well as expected. If you’re losing money and the property depreciates, it’s time to consider selling, particularly if the market is looking stable.
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4. You’ve spotted better investment opportunities
The whole reason we’re in the property investment game is to increase capital gains, and if you’ve found a chance to do just that, it’s better to seize it.
Just do your research first. Remember that there are many costs associated with both buying and selling a property, so make sure that the flip is going to be worth it in the long run.
The ATO also has excellent advice on tax deductions when selling a rental property.
3 Cases when you should hold on to the rental property
Knowing when to hold is an artform on its own, and it’s an important one.
Not selling your investment property can mean more significant benefits in the long term. So, here’s a few ways you can tell that you should keep your head cool and stick to your guns.
1. You bought the property quite recently
If you’ve only had your investment for five years or less, it may cost you more to sell than it’s worth. As you know, the costs of buying a property are extensive, and the same can be said for selling.
Considering your real estate agent’s commission, home updates, closing costs, and advertising (we could go on), selling can be a pricey venture. To ensure you’re not coming out at a loss, we’d recommend holding onto your property until you can be sure to make some capital gains.
ANZ has a comprehensive list and price breakdown for selling a property worth checking out.
2. Your property is in a good location and is making you money
This should be an obvious one, but sometimes a lull in the market can scare investors into thinking they need to sell. If your property is located in a growing area, you’re finding it easy to get tenants, and its value has increased since you purchased, there’s no need to consider selling.
Sure, maybe it could be better, but we’d instead keep your risk to a minimum and take the safe route for more financial stability.
It’s also more challenging to maneuver selling a rental property with tenants, so if you’ve got quality tenants at the moment, we’d recommend holding onto them. Remember, it’s not just about short-term gains – your property is going to increase in value over the long term steadily.
3. Your current property is boring you
We mentioned earlier that if you find a better investment opportunity, you should grab it.
That being said, you need to avoid just looking for novelty. Too often, we see property investors let go of a perfect property because they wanted something new and exciting.
On the contrary, it’s a pretty good sign if your rental is boring you out. It just means that things are going good, stable and without trouble. So, don’t shake it up just for the sake of it.
Real Estate Experts and Newsletters You Should Be Following
No doubt about it; we’re in the era of blogs. Whether self-declared or accredited by others, any property expert can publish their real estate expert advice online.
Trawling through the masses to find the relevant (and reliable) real estate blog for you can take precious time, so we’ve done it for you (you’re welcome!)
Below are some of our favourite property investing experts and property research newsletters in Australia – suitable whether you’re brand new to the property investing game or a seasoned professional.
5 Property experts to follow
Let’s kick things off with the property experts and property blogs in Australia you should be following.
1. Michael Yardney
Michael Yardney’s Property Update blog has been around since back in 2001 and was voted the world’s most popular property blog on Feedspot for four years.
It covers many topics suitable for novice and seasoned investors alike, so it’s a fantastic blog for you to frequent.
Michael also has nine published books, runs a property investment podcast, and regularly contributes columns to Smart Company and the New Zealand Property Investor Magazine – a true all-rounder!
2. Helen Collier-Kogtevs
After Helen and her partner, Ed, were able to retire with an impressive property portfolio, they decided to share their newfound expertise with others – and so was born Real Wealth Australia.
If you’ve decided to take the plunge and invest in property but aren’t sure where to start, Helen’s Property Portfolio Formula Course has some great real estate expert advice.
3. Doron Peleg
With over 20 years of experience in the property investment game, Doron Peleg is worth a follow.
His company, Riskwise Property Research, is an excellent resource for developing risk assessments for your potential investments.
You can follow Doron on Linkedin, where he shares lots of insights with a strong focus on data and risk assessment – experienced investors may find these particularly useful.
4. Margaret Lomas
Margaret Lomas is a superstar of the property investment world – a best-selling author, TV host, and the founder of Destiny Financial Solutions.
Her book, “20 Must Ask Questions for Every Property Investor,” is a must-read if this is your first foray into the investment world and you’re after some expert advice.
5. Dymphna Bohol
Dymphna Boholt’s multi-million dollar international property portfolio is a testament to her expertise in the field.
She provides several programs ideal for beginner investors, and her I Love Real Estate blog is worth a read to keep on top of current property news in Australia.
Property research newsletters you should be getting in your inbox
If you want other newsletters delivered directly to your email as a supplement, there are some valuable newsletters out there – an ideal way to keep on top of the investment game.
Here are some of our favourites:
1. SQM Research
SQM is your go-to if you’re looking for detailed property data.
They provide a broad range of free and paid premium data, including auction results, rental yields, demographics, and sold records.
They also have an option for a custom data request if you’re after something super specific for your new rental property.
SQM’s free weekly newsletter gives you updates on their current data results, as well as market commentary from real estate analyst Louis Christoper.
Get a CoreLogic subscription if you’re after insights into a property’s estimated yield, cash flow and to keep an eye on current investment hotspots. Like SQM, CoreLogic provides essential data to help you make the most intelligent decisions possible.
CoreLogic’s data packs require you to pay a premium membership fee – options are ranging from one week up to 12 months membership.
This would be particularly helpful for any property investment newbies out there, as the pack includes a comprehensive list of pros and cons for your prospective property.
They also have a free weekly newsletter called Property Pulse that sends you updates on property news and CoreLogic’s latest residential property research. We recommend you grab that.
3. Australian Property Investor
While they also provide access to many data and analytics, Australian Property Investor covers a lot more news, case studies, and interviews with industry experts than our previous two sites. Their weekly newsletter is run by property investment connoisseurs and is excellent for keeping you in the loop of the Australian property world.
API’s (free!) membership also gives you access to some great tools, including tax and finance calculators, as well as invites to events, workshops, programs, and property expos – a winner in our eyes.
But are real estate “experts” really trustworthy?
The short answer is yes and no. Those who are well-known in their industry are bound to have a proven track record. But, experts always take a very general view and cannot possibly give you the level of research necessary to make a good investment in your specific circumstances.
It would help if you always supplemented expert advice with your research. Real estate experts are an excellent avenue for staying on top of recent news and trends but should not be followed blindly.
Always supplement expert advice with your research and deep dives. Never follow their hand blindly.
The internet is inundated with real estate experts – both a blessing and a curse! It can be challenging to know where to start, so hopefully, our list has helped clear out your tabs.
Podcasts for property investors
We’re all leading busier and busier lives. We work longer hours, socialise more than ever and rarely get a moment to ourselves. The rare time we do get is often on the commute to work, working out at the gym, driving or walking the dog.
It doesn’t matter if you’re a long term property investor, looking at dipping your toe in the pool or somewhere in between; keeping abreast of what is happening in the property market is beneficial and can lead to smart investments. It’s also time-consuming. Finding time to sit down and research and read the news, blogs, and overseas trends can be a little overwhelming.
Podcasts are a great way to make the most of those moments we have to ourselves. Usually, between 20 mins and an hour and on a specific topic, these little information nuggets are easily digestible. We have collated our top property investments podcasts to save you looking around:
Director of Smart Property Investment Phillip Tarrant chats with many people in the property investment space. Guests include everything from demographers to politicians, and they discuss a new topic each week.
Ryan McLean’s regular podcast is short, sharp, and to the point. He covers a broad range of topics, including finance, where to invest, renovations and more. The on Property podcast is released around five times a week and are usually between 10-20 minutes and are a great way to get your daily dose of property inspo.
The weekly Real Estate Talk podcast is hosted by Kavin Turner and features a panel of speakers each episode. Property investment strategies, tips and news are all covered over the approx. 45 minutes. Often supporting materials are made available on the Real Estate Talk podcast.
The Quit the 9-to-5 podcast is aimed towards those looking to make a career from their property investment. Each episode sees Ben Handler, CEO of the Buyers Agent Institute, chat with a successful person making a comfortable living through property investment.