Are you considering selling your investment property?

Are You Considering Selling Your Investment Property?

Do you find yourself getting anxious over your tight cash flow? Are you lying awake at night, stressed about your mortgage payments? If you're facing these financial pressures and pre-empting another interest rate rise with dread, you’re not alone.

It used to be that buying an investment property was a sure bet, a great way to earn extra money. But now, as interest rates climb, people have found themselves trying to get a grip on their personal finances, leading many to deal with the possibility of selling their investment properties – a thought that once seemed distant.

The Current Climate

 With the country experiencing its 12th interest rate rise, many investors who entered the market seeking to build their portfolios are now facing new realities. Leading Real Estate Agent Stephanie Jordan from LM Property, has seen the signs, noting that “there’s been an increase in the market listings of investment properties, which is almost pre-emptive of another interest rate rise”.

Furthermore, this environment is particularly challenging for homeowners transitioning from fixed rates to variable rates. Expert Mortgage Broker Ross Sergi, from MAB Newcastle, explains how he hasn’t witnessed many defaults on home loans, but he’s quick to acknowledge the issues that many are facing. “The struggle is real—especially for those coming off fixed rates", he says.

When the Cash Flow Tightens

The conversation around property investment is changing. It is no longer just about the long-term hold and investment growth but also about the immediate financial viability – can you keep putting money into a property when your own budget is stretched so thin? Is it wise to hold on to real estate that is starting to feel like a financial burden? And what sacrifices are you & your family willing to make?

Homeowners are taking a hard look at their portfolios, asking if their investment properties are still working for them under these new pressures.

Understanding Your Options

Yet, selling is not the only avenue when cash flow gets tight. Ross Sergi from MAB Newcastle assures us that “there are definitely other ways to restructure your finances, extending your loan term is one option." Think of this as stretching your mortgage payments over a longer period, each payment takes up less of your monthly budget, giving you some immediate breathing room.

However, this breathing room may come at a cost, affecting your long-term financial plan with additional interest payable over the term of the loan.

It's about weighing up the present challenges against future goals, understanding the market's rhythms, and making informed decisions.

Consequences of Selling

Selling an investment property is not a decision to be taken lightly. There are significant tax considerations and the potential for changes in cash flow—both positive and negative.

However, while selling may seem like giving up, it can also be the smartest move you can make. It is not giving up, its taking control. Steph Jordan from LM Property stresses the importance of being proactive, "don’t wait until it's too late. Get ahead, get advice, and understand what the selling process entails."

Developing a Forward Strategy

For those feeling the financial stress, now more than ever, is the time to seek out professional advice. Our team is ready to guide you through your options, help you understand the potential consequences, and craft a plan tailored to your situation.

Additionally, despite the market's challenges, properties are still selling for good prices. "Surprisingly, prices are holding up well," Steph Jordan comments, "but buyers are becoming pickier”. As for how long your property might be on the market, she’s seen most houses find new owners within 4-6 weeks, depending on the area and price point.

Seek Professional Advice

The key is to act proactively. With the right advice, investors can make informed decisions that align with their long-term financial health. Whether it's optimising the timing of a sale or exploring other financial avenues, our team is equipped to provide tailored advice that anticipates market trends and personal needs.

Before you decide to sell your investment property, talk to us. Let's ensure your financial journey is navigated with care, expertise, and a deep understanding of your personal needs.