FAQ 113 Sell or Hold – How to decide?

Should I sell or hold my current investment property?

There are a few ways to approach the answer to this question. The most obvious way lies in understanding how that property is currently performing AND if it has untapped potential to improve its performance.

An underperforming property with no potential to improve would be a great candidate for culling. The only way that the performance of a property can be assessed is through analysing the figures. The PORTFOLIO ANALYSIS spreadsheet will assist you in this. 

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Some questions that help in the decision making process.

a) What is this property delivering to me currently? 

b) What do you estimate that it will deliver at the time that you set for achieving your goals? 

c) Will this property form part of my Ultimate portfolio of passive income producing properties? 

d) If this property were debt free then what would it deliver by way of cash flow?

e) What potential does this property have by way of equity or income growth?

f)  Can I continue to execute my investment plan without selling or refinancing this property and achieve my goals in the time I have specified ( financial plan)

g)  Is there any equity in the property AND can I draw down this equity and use it to assist my investing journey?

h) If I sell the property then what will be released by way of equity and loan serviceability to assist me continuing my investment journey?

Points g & h are covered off with OPPORTUNITY COST ANALYSIS 

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We all start our journey at different points so there really is no ‘one size fits all’ solution. If an investor starts out with a large amount of equity then given similar goals , the task is easier to reach that goal compared to the investor with lower amounts of equity. So understanding the investor starting position AND long term goals is of the utmost importance in defining the task ahead.

The definitive guide to what needs to be financially achieved annually comes with your FINANCIAL INVESTMENT PLAN – a financial map of what needs to be achieved year on year. If an existing investment property is performing slowly from an EQUITY position then it may hamper equity progress to reach a goal.

Webinar 3 Nov 2021 contains information and planning sheets to assist you.

Webinar /ultimate-coaches-cashflow-modelling-3rd-november-2021/

Spreadsheet /wp-content/uploads/2021/11/Cash-Flow-Modelling-Projections-031121.xlsx

Summary

You will need these to assist you in your decision:

PORTFOLIO ANALYSIS completed with your properties

OPPORTUNITY COST ANALYSIS completed with your property

LONG TERM GOALS – written & following the SMART rules 

A FINANCIAL PLAN written & designed by you such that it will deliver you to achieving your long term goals

EDUCATION – on how various types of cashflow properties deliver ( the numbers)