Investment properties are not forever properties.
There’s a time to buy and a time to sell. So when is it a good time to sell?
- Is it a good time to sell after 2 years, 5 years, 10 years, or more?
- Is it a good time to sell when a better investment opportunity comes along?
- Is it a good time to sell when you have doubled your outlay?
A popular exit strategy is to sell when you have doubled your cash outlay. This happens when the property increases in value by 30%. This example is from the video:
| Buy Price | $500,000 | Sale Price (+ 30%) | $650,000 |
| Loan | $400,000 | Loan payout | $400,000 |
| Outlay | $100,000 | Sale Proceeds | $250,000 |
The sale proceeds ($250,000) are 2 ½ times the outlay ($100,000). But you need to factor in transaction costs ($50,000) for stamp duty, buy and sell expenses and capital gains tax.
Deduct the transaction costs from the sale proceeds, and you have $200,000, which is double your outlay of $100,000.
Video link When is a good time to sell an investment property?