I often get asked the question “Drew, should I sell any of the properties in my portfolio?”

My answeris always the same. I am never, ever going to tell anybody to sell, no matter who they are or what the circumstances are. All I’m going to do is show you the financial impact it has should you sell your properties and take profit off the table, or should you not.

Now, remember, from a finance perspective, at a high level, there’s really only two things that will prevent you from continuing to borrow more and more money with the banks. It’s either your borrowing capacity, which we discussed, is your household income versus your household expenses, or, it’s your buying power, which is the level of deposits that you have. Either cash, equity, or access to somebody else’s equity. That’s really it, from a high level perspective.

So, let’s look at your borrowing capacity. If the banks aren’t prepared to lend you any more money, based on your current circumstances, you have two options.

Option number one is you need to increase your income.
Sometimes easier said than done, right?

Option number two is you need to decrease your debt.
Sometimes easier said than done.

But, this is where having an existing portfolio could really help you out, if your intention is to keep growing and move your portfolio forward. Now, what I mean by that, is, you can look at your existing portfolio, and have an analysis and say, well, of the properties that I have, do I genuinely believe that each property will go up by another $50 – $150,000, in the next 12 – 24 months? If the answer there is no way, no chance in hell, then I would seriously consider taking profit off the table, using that profit to pay down some debt, to allow you to reinvest again and keep growing your portfolio forward.

If you then have a portfolio where you think the properties are going continue to go up substantially in value, in the short term, then I wouldn’t sell. I’d keep them. But, at the end of the day, it’s really up to you.

Speak to agents, speak to bank valuations, understand the market of what you think is about to come, before you make any decisions.

Property investing is very, very expensive to get into, and it’s just as expensive to get out of.

So, please make sure that you put a lot of thought into what you’re going do before you sell a property.

If you have any questions call us on 1300 881 422