While the value of houses in Australia is always on an upward trajectory, there are troughs and peaks along the way.
After the last four years of fluctuating interest rates and higher than average demand from buyers, now that we’re getting into 2024, you may be wondering if the time is right to cash in on your investment property.
The decision is ultimately up to you, but here are some of the factors to consider:
What to consider before you sell your investment property
1. Your long term goals
How long have you had your investment property for and what did you want to achieve in the first place?
With property values rising dramatically since the pandemic but more ‘slow and steady’ results expected during 2024, now may be a good time to sell and make use of the capital gains you have made.
Is it worth holding on for another 1 or 2 per cent growth over the next two or three years or should you sell to free up some cash now? This is a question worth discussing with your financial planner.
2. Your holding costs
Interest rates have been left on hold in February and are likely to remain at high levels throughout the year while the Reserve Bank works to get inflation under control.
Even with good tenants who pay a great rate, you may do the sums and realise the costs involved with paying off and maintaining the property aren’t giving you the returns you want. You could also be feeling the financial strain and recognise that you’re better off investing elsewhere for the time being.
3. Recent and forecast performance
Do some research to see how real estate is performing in your area. While average prices in Australia are still rising, different postcodes are giving different results.
You may notice that prices have peaked and are beginning to drop in the areas around your investment property. If this is the case, it may be time to take advantage of the gains you have made and move on before you lose more money.
On the other hand, if you’re in an area that is still experiencing a positive growth trajectory, it will be worthwhile to hold onto your property and even buy another one nearby if you can.
A real estate agent can help you figure out what your investment is worth in the current market and how much it might sell for by the end of the year, based on recent data and historic trends.
4. Demand from buyers
Selling an investment property can be tricky because you risk losing your tenants; they will often hand in their notice once they realise the place is for sale and you don’t want to find yourself with an empty property if it means you will struggle to cover the repayments.
Your agent can advise you how long they think it will take for your investment to sell and you can base your decision to take action around this. Ask about average sale times not just for your suburb but for the style of investment property you own.
Many agents have buyers who have pre-approval and want to act quickly. They can even help you achieve an off-market sale so you and your tenants don’t have to endure multiple open homes.
5. Is the place sale-ready?
Buyers move fast when they come across well-presented homes in good condition. Your rental property may be in need of a facelift before you put it on the market. In this case, you can work with your real estate agent, property manager and tenants to make some necessary repairs and upgrades. This will result in a much smoother process when the time comes to sell. If you fail to find a buyer, you can look into increasing the rent because the home is now more appealing.
Should you sell your investment property in 2024?
The final decision is up to you but will be influenced by advice from your mortgage broker, accountant/financial planner and real estate agent. Get in touch to review your options and you will find it easier to make a decision.
Ready to sell? Reach out to your local Professionals representative.
