What exactly does it take to really warm up your property investment portfolio? And going beyond just buying another investment property, the other big question is, how LONG does it take for your investment property to really heat up? And ultimately, when is the best time to sell?
The widely held answer to this is simple, and across the board experts generally agree that property investing is best approached with a long-term view, and you’re quite likely to hear 10 years cited as a reasonable amount of time to hold an investment property. Other commentators are adamant that ‘never’ is an even better goal, as the moment you exit the market you pull the plug on a wealth generating machine and are hit with capital gains tax and other fees, but perhaps the most common sense recommendation of all comes from veteran property investor Jan Somers, who cites retirement as the most appropriate time. Afterall, it makes sense to cash in at a time when your property has accumulated the most amount of capital growth possible in your lifetime, and while you still have enough time to put all that capital to good use.
Also, the long term approach doesn’t just make sense in principle, it is also confirmed by actual data, one example being the last CoreLogic Pain and Gain report which recorded that for every profitable property sale in the last quarter of 2016, 9.1 years was the average holding time. And the average profit across these sales was a very reasonable $262,671, which is even more impressive if you take into account that this includes profits made by home owners who didn’t buy or sell for the express purpose of accumulating and locking in capital growth.
Now it’s important to note that holding an investment property for 10 years, or until retirement, isn’t the end all and be all. It’s also important to time your exit at the peak of the property cycle for the market you’re invested in whenever possible, it’s also important to keep in mind your actual investing goals, it’s important to consider selling under performing properties early, and finally there are times when life presents new challenges and opportunities where you might also consider selling early. But the single biggest lesson is simply that the sooner you get into the market, the sooner you can reach the truly rewarding levels of property wealth accumulation. Which means, the sooner you start your investing journey… the faster it will warm up.