When to sell a property
There are two sides to a coin and in most investment scenarios there are at least two possibilities. It is important to know what to buy, where to buy and when to buy.
However, it is also important to know when to sell. While it might be desirable to buy and hold forever, that may not be the wisest and most practical position to take in all situations. You could lose more by holding on to what you should let go off. Understanding this delicate scenario could save you millions and could make you millions. Lack of this knowledge could also cost you dearly.
When you decide to enter the investment arena, one realises that nothing is absolutely certain. There are several factors that are outside the full control of every investor that could positively or negatively affect the value of your investment or the likely outcome. When expected and unexpected factors favour your investment, you do not need too much analysis to decide what to do. You can decide to hold on to the investment longer and watch it gain more value. You can also decide to access the value appreciation fully or partially.
Most experienced investors engage in regular evaluation of their property portfolio in line with their goals as well as available information. They know that sometimes they need to sell off bad property purchases or those performing below expectation in order to channel more resources to those investments with better possibilities. There could be new facts that could reshape an investor’s opinion of a property investment. For instance, government policies or projects could help boost the prospects of an area.
One common ground for selling properties is when it is a bad purchase in the first instance and you decide it is better to let go .Yet this is not an automatic indicator of when to sell since some bad purchases are better managed by patience rather than haste.
In letting go too soon, you may incur more losses but in holding on a little longer you might even turn a loss into a gain. For instance, if you bought a property during a peak period that was followed by a slowdown in growth, it may be more pragmatic to wait a while for the prices to pick up a little rather than sell in a panic.
Real estate investment can be very forgiving if you have the patience to wait especially when you have bought the right location. In cases where you bought the right property at the right location but bought at a much higher price than its value if you can wait for a few years the property will eventually appreciate beyond the initial purchase price. It is also possible that you might have entered the real estate investment cycle just before property prices dropped, if you can hang in a little longer the season will change.
There are times when the issues may be a fundamental one such as buying a property in the wrong location or buying the wrong property. An example of this occurred when an investor bought a building with the intention of renovating it and then flipping it only to discover that the property had major structural problems that go beyond renovation.
The only way forward was to demolish the entire building and rebuild .This comes at a significantly higher cost than earlier budgeted. The investor had to make a decision between letting go and investing more.
There are times when the cost of holding on to a property comes too high or is resulting in a loss to the investor. This reminds me of the unfortunate experience of an investor whose large rental property was not yielding any income to him not because he lacked tenants but because the tenants choose not to pay him rent for several years. The property was a source of continuous stress to him due to management issues. After changing from one agent to the other he eventually got tired of having such a challenge and decided to sell the property.
Unfortunately, most investors are caught napping in the midst of action. They either hold on indefinitely to all kinds of properties or they dilly-dally on selling until the right time passes by. There are times that some once in a lifetime opportunities come by to make above market value profit if you sense the timing and respond accordingly.
This is especially true during times of rapid property boom. Wise investors use such times to maximise returns on strategic investments and reposition themselves for the future. In summary, there is really no hard and fast rule as to when you absolutely must sell. It all depends on a combination of your goals, information and that sometimes elusive thing called opportunity.
PUNCH.
