Do not sell your investment properties until you absolutely have to.
One of the mistakes made by many property investors in the last five years, says Bill Rawson, Chairman of Rawson Properties, has been to sell out far too soon.
'In the last few years,' he said, 'we have seen many people move into property investment for the first time '“ and judging by those investing in our Groups development schemes are doing very well out of it.
'However, all too often, they are so dazzled by the 50 to 100% profit that they can make in three to six years that they sell '“ even though at that stage they have no urgent need for the extra cash.
'This is usually a pity because it is only after four to seven years that the monthly rentals start to cover the bond repayments in full. Furthermore, they would have to pay capital gains tax on the units they sell. In my view, it makes much more sense to hold on the units and leave it to ones heirs to decide whether to sell or not'
The 'regret' factor, said Rawson, may have something to do with many peoples decision to sell prematurely.
'Although the properties that they bought four or five years ago have appreciated significantly in value, they consider the property 'boom' to be over and decide to pull out of property and go for alternative investment channels such as the stock exchange or the money market, as they believe that these can offer better returns on their investment.
'My view and the course that I and many of my franchisees have followed, is that you should carry on buying throughout your life, using the existing partly or fully paid up properties as collateral on the new buys. Put naively, provided you buy sensibly and stick to the lower and lower middle price range units, you really cannot go wrong. I believe it makes no sense to stop buying and cash in when you can still get 10 to 15% appreciation on the bank loan on your property'
