It is better to buy and sell your property to make a quick profit? Or, is it better to buy and hold onto your property for the long-term? Everyone has his or her own opinion. But, I believe the best investment strategy is to not sell your property. Only sell your property to fund your retirement, or if you need money for an emergency.
Why you should not sell your property?
When you buy and hold a property for a decade or more, the value often increases more than the original purchase price. This increase in value is known as ‘capital gain’. If you sell your property soon after you have purchased it, you earn less capital gain.
Buy holding on to your property, you can remortgage and use the money (equity) to purchase another investment property. Thus, increasing your rental income. The advantage is that none, or very little of your personal savings is used to grow your investment portfolio.
This is what I did to purchase a new investment property every three to five years.
Selling one property to pay multiple mortgages
If you invest in multiple properties, the value of each property increases over the long-term. But, the mortgage debt decreases.
Most people work more than 25 years to pay off their mortgage. But this is not your only option. My advice is to rent your properties so your tenants pay most of your mortgage. Keep the properties for at least 20 years, then sell one property, and use the profit to pay off the mortgages on your other investment properties.
For example, my husband and I own one house and three apartments. In 15 years, I anticipate my house will be valued over £1m. When I retire, I will sell my house. The profit earned should pay off the mortgages on my three remaining apartments.
The rental income from each apartment becomes my retirement fund. This means I will not be dependent on a pension or government-funded retirement benefits.
As part of my plan, I will sell my house, as opposed to the apartments, because it is the highest valued property. Other people may prefer to sell their apartment instead of their house. Deciding which property to sell is a matter of personal choice. Just make sure you calculate that the profit earned from selling your property will cover your mortgage debts.
So, do you agree that investors should not sell their property?
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