Should I stay or should I go? To lease or to sell your investment property

At D Residential Group, most of our clients are investors who want to increase their long-term property investment portfolio, however we also work with clients in situations where selling the investment property might be the better option.

The best time to evaluate whether to sell or continue managing a property is when you’re approaching the end of the current lease or if you’ve recently inherited a property. We’re constantly tracking trends, particularly across Mount Hawthorn property investment circles, and have come up with five factors to consider before selling.

Speak with your local property manager

Make the decision so much easier by speaking to a local expert who understands the property market, the potential profit and the costs involved. Our director Diana Patrascu is an expert in the Perth property market with years of experience and loves the opportunity to discuss investment potential (with a side of honesty if there is no potential!).

Track the investment’s performance

The most important consideration in property investment is always finances. If you’ve owned the property for a while, reflect on the income it provides versus the outgoings. If you’re not making money (or worse, losing it), and the home is depreciating, it’s a good sign it’s time to sell. If you’ve just inherited the property, research the rental income for the location and size, and whether demand is high. If this is all too much, refer to the above point and contact us.

Consider immediate income versus long-term income

There are times in life when money talks – your child’s school fees, retirement, reducing work hours or another investment might catch your eye. In which case, liquidating your investment property makes sense. However, if your property is in good condition and low maintenance, it is likely to earn you a good monthly income. The reason ‘safe as houses’ is a commonly used phrase is because most properties do increase in value over time. Also, if you’ve only had the property a short period, capital gains tax is a cost worth considering.

Consider the tax benefits of retaining the property

Property investment never has a ‘get rich quick’ slogan attached due to the big outlay to purchase the property – however, there are many tax benefits that significantly offset your tax. Renting your investment means you can claim deductions ‘for most of the expenses you incur’ according to the Australian Tax Office. These include interest on your loan, rental expenses (from council rates to property management fees) and building depreciation. The tax breaks for our clients are key to building their long-term wealth.

Still unsure? There’s plenty more to consider, please contact us for an honest conversation about your options.