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Blog

How And When To Sell An Investment Property

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Making the decision to sell your investment property needs a lot of consideration. If you want to recycle the equity to buy another property the costs of selling can far outweigh paying a rental property manager’s fee or paying a tradie for some maintenance work.

Stamp duty on the new property especially is a biggie. Then there’s capital gains tax from the original property and legal fees for both selling and buying. It could take years to recoup the losses.

But there are some circumstances when it can be better to sell. While there are more reasons for selling than listed here, these are three common scenarios:

 

1. Too much maintenance

Quality of life is important and if you’re continuously fretting about making mortgage payments, finding the money to replace a leaky bathroom or dealing with annoying tenants, it might be time to sell your investment property.  

 

2. It’s not performing well

Investing in property is a long term venture and markets can fluctuate, but if you’ve held your rental property for over ten years and you’re not experiencing a decent rental yield or capital growth, then it could be time to cut your losses and invest elsewhere.

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3. You want to free up capital

Property isn’t a liquid asset, so if you need capital for other ventures, whether business or pleasure, you’ll need to sell it. Ideally you want to hold onto an investment property for 7-10 years in city markets, and longer in regional areas, but if you’re an older investor then you have less time on your side than a younger investor.

If you’ve decided you definitely want to sell your investment property, the next decision you have to make is how.

 

Find a quality agent to sell your property for top dollar

Getting top dollar on your investment property can be the difference between selecting a good agent and a mediocre agent. Do your homework on agents, research at least three or four that are recommended from friends and colleagues or sign up with a lead generation app like Bricks+Agent that can narrow the field.

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Always look at performance-based results - a large amount of ‘for sale’ signs, for instance, doesn’t always mean an agent is selling a lot, it can just mean they’re active.

 

Setting the right price 

Setting the right price is key in selling your investment property. A good agent will have knowledge of the market based on experience and previous sales, so you should definitely take this into account. But you should also do your own research by checking the sale prices of properties that have been selling in the neighbourhood

 

Be aware of tenant laws and regulations

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If you’re selling an investment property that’s tenanted there are some pros and cons to take into account and tenancy laws to be aware of.

Pros of selling with a tenant:

  • You’ll receive rent during the selling process
  • It will attract other investors as they’ll receive rental income immediately.

Cons of selling with a tenant:

  • You need to give the tenant notice when holding open for inspections
  • You’re relying on the tenant to keep it tidy and presentable.

Tenants are entitled to stay for the duration of their contract but the minimum notice to leave period is different across Australian states. In NSW for example, the tenant has to be notified a minimum of 30 days beforehand that the property has been sold and they need to vacate after their fixed term ends. In Victoria this minimum notice period is 60 days.

We hope this article sheds some light on the issue of selling an investment property, which can be complex. For more insights on property investment sign up to our monthly newsletter below!

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Topics: Better Selling, Property Advice

Jon Stul

Written by Jon Stul

Having spent over 12 years in the real estate industry covering all facets from residential through to commercial, established and off plan properties and sub-divisions, he has an in depth knowledge of the industry. Stepping out of the industry four years ago and moving interstate to expand a frozen yoghurt chain that has gone from 1 to 4 stores in the time he has been involved. This was recently sold to Made Group. Real estate has always been in his blood and it was a natural fit to start Bricks + Agent given the amount of insight he has into the industry as a whole. Having seen how all different forms of traditional marketing was used to the direction that it is now heading today, we think we have come up with a truly unique proposition that fits into the current state of the property maintenance market.

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