There are those who believe you should never sell an investment property, especially if it’s paid off, generating an income for you every month in the form of rental and increasing in value.
“But times and circumstances and areas change, and properties tend to require more maintenance as they age, so it is certainly worth considering a different point of view,” says Gerhard Kotzé, MD of the RealNet estate agency group.
“It may be, for example, that your property has reached the rental ceiling for the block or area in which it is situated, while the levies and / or municipal rates are still rising – and diminishing the returns on your investment. If you sold it and put the proceeds towards the purchase of a property that you could rent for more, you could restore and perhaps even increase those returns.”
Similarly, he says, as your investment property ages, you should at least run the numbers to see whether it would be worth “replacing” it with a newly-built one that could mean a significant reduction in maintenance costs for the next few years.
“It could also be that the area itself has changed since you bought the property and is no longer so attractive to potential tenants. Both suburbs and holiday towns can fall out of favour, and then once again you might want to sell the property and buy another in an area with higher rental demand and greater capital growth potential.