How long should you hold an investment property?
While each individual may have different goals driving their property investment, there are some fundamentals that apply across the board.
Blogger: Peter Gianoli, general manager, Investor Assist
What is the ideal investment strategy?
This is an important question about investment strategy. Investing in property is best as a long-term investment strategy. At Investor Assist, we recommend a minimum of five years, and preferably seven to 10, to be a suitable timeframe.
Buying an investment property involves substantial upfront, ongoing expenses, and exit costs. In order to make a profit, the value of an investment property needs to grow by more than the value of these costs, as well as the after-tax costs associated with holding onto the property.
How long do I need to hold an investment property?
The best long-term investment strategies really require time for the investment property to increase in value. Time is also important if you are targeting capital growth from your property investment. With investment properties, you may need to endure occasional years of low or even negative growth throughout the course of your investment.
Beware of the small, but loud minority of people, in the real estate industry spruiking ‘Get Rich Quick’ schemes and claiming they can make you an overnight millionaire. This is simply not realistic. What is realistic is the ability to achieve long-term financial security by making well-researched, and carefully considered, property investment decisions. Ask us how to build a property portfolio, and find research advice on our website.
Be prepared for the ups and the downs as you build a property portfolio. If you achieve strong growth in a short period of time, consider the growth a bonus, but always keep your long-term investment strategy in mind.
How to build a property portfolio?
There may be other factors influencing how long you invest for – including your tax situation, and your age until retirement.
In addition, you may wish to explore an investment strategy through your self-managed super fund (SMSF). A professional adviser can assist with advice in regards to these considerations.
