People often have the image that investing in property is always a reliable and a good option. However, not all properties will bring in the return that you desire. It is sometimes necessary to pull the plug on a property that looks like a bomb aftermath.
Many of us may question, what is an underperforming property? An underperforming property can be considered if it doesn’t meet the goal and expectations that you have set, or the property value has not been growing with the median price of Melbourne suburbs. Possible reasons for this could be:
- Buying and investing in an older property, and then finding out it will cost a lot to repair and renovate.
- Investing in high density apartment areas, and then other apartment buildings being built in closer areas, thus affecting its value.
- Paying more for a property than expected and the property value not increasing.
- Buying a land package or a property in new estates where it has a large volume of empty block, thus reducing the shortage factor.
- Buying in the wrong location for capital growth.
- Buying properties in hotspots during a boom period, but then dropping dramatically.
What should we do, wait or sell?
People are often questioning what they should do, whether that is to sell the property and cut losses now, or to hold on to the property and have faith that it will grow. It could be that in years to come the property will increase in value over time, or it could be a better idea to sell the property and invest in something else. Consider asking yourself the following questions:
- Should I sell my investment and put the money into another property, even though if it results in a loss?
- Is it predicted that capital growth could occur in the next few years? Or will improvements increase the possibility of growth.
- Is it time to sell the property? For example, if the housing market is plateauing out, it might be a good idea to wait. However, the longer you hold onto your low-quality property, the more it could cost you.
- What does the future look like in terms of major development and infrastructure in the local areas? What happens to the prices of properties in this area?
In order to answer the questions, it would be a smart idea to consult a few experts such as a mortgage broker, financial planner, accountant or a banker. They will inform you with the costs of buying a property in the first place. Consider taking on a buyer’s advocate, where they able to tell you what the current market value for the property is, and whether it is a suitable option for your investment strategy.
Seeking Professional Support
Selling a property in some cases can be an easy decision, however in other cases it might be a conundrum for an individual. Regardless of which side of the fence you sit on, it’s important to seek out professional help from your accountant, for your tax position. Your mortgage broker or banker can advise you on your current loan structure, and the effects it could potential have.
Wise Real Estate Advice, Mark Ribarsky, can also provide expert opinions on the condition of the property and the current market value of a property. Lastly, they can give advice on whether to sell the property or to invest in something else.
Remember always to seek out professional support before ditching on your property.