One of the main reasons that residential property investors sell their properties is that they are impatient to see the fruits of their investment.
“Sometimes this causes them to sell at an inopportune time – say, when the market is slow or before they have held the property long enough to see serious capital appreciation,” Bellarine Property managing director Christian Bartley said.
“To use a culinary analogy – if you take a cake out of the oven before it is properly cooked, not only will it not rise (capital appreciation), it may even sink (capital loss)!”
Mr Bartley said investors should never sell.
“Astute investors keep buying more properties as their borrowing power increases.
“Sometimes people think selling is the way to realise a profit.
“But the most effective way to enjoy your increasing wealth is, paradoxically, to borrow more.
“When you buy your first property, you are usually stretching yourself just to get a foot on the investment ladder and there is little money left over for luxuries.
“As your portfolio grows in size and your equity increases, you can have your cake and eat it too.
“You simply hold your investment properties for optimum capital increase when you need it (usually on retirement when income from work ceases) and use further borrowings to enhance your current lifestyle according to your interests.”
Mr Bartley said the best strategy for most investors was to embark on a program of planned property investment at their earliest financial convenience – usually when the equity in their family home reaches a fairly high level and after consulting their accountant.
“If you keep adding to your portfolio, you escalate your assets to the level of wealth you desire.
“The longer you hold onto the properties and the more they increase in value, the more you are in control of your own financial destiny.”
For more information, phone Christian Bartley on 0410 695 325, email christian@ bellarineproperty.com.au or head to bellarineproperty.com.au.