In recent auctions in Sydney, a whopping 80% of properties have been sold. With prices of properties going up to new all-time highs, Sydney is clearly a seller’s market. The experts suggest selling your property as your last resort instead of putting it on the market to take advantage of the current market benefits.
A successful property investor and author, Zaki Ameer founded Dream Design Property in 2001. In a few short years, he accumulated a portfolio of 10 properties with a total worth of $3 million. He continues to build his fortune today.
In 2011, Zaki founded DDP, a company focused on property investment and strategy. Zaki counseled many people how to proceed following the poor timing of a property sale.
Points to Keep in Mind While Selling Your Property
Selling your property should be your very last option, but if you must sell, you should keep the following points in mind:
- Will you be paying capital gains tax? When you sell your property, you must estimate how much capital gains tax you will have to pay. The CGT is levied on the difference between what you paid for the property and what you received after the sale. Taxes vary in amount and can often be hefty, reducing your profit margin significantly. Most people only consider CGT post-sell and end up paying a lot more than expected, making the sale completely unprofitable.
- Are you planning on using the profits wisely? Your property may be up for sale so you can use the profits towards another endeavor, but only do so if you plan on using the money for a greater and more lucrative investment, such as expanding your property portfolio or starting a business. The future investment must be far more rewarding than if you decide to keep the property before you sell.
- Is there a vacant property in your possession? If your property has been vacant for over two months, then it indicates a bad investment. When selling should always be the last resort. Selling up in this case will enable you to make a more profitable investment.
- Market performance at the moment. If you must sell, now is the time to do so since property prices are hitting record levels in some major Australian cities. A low point in the market should never be considered as a time to sell. If there is a high demand within your selected suburb, you can leverage that demand to achieve a higher price for your property.
- How much equity you have in your loan. The equity in a property is the difference between the market value and the mortgage balance. Based on your financial situation and the approval of your lender, you may be able to utilize the equity on your loan for other purposes. As long as you haven’t withdrawn equity for a period of time, you might want to consider selling, as the loan will end up costing you more due to the lack of equity.
Zaki Ameer is the Founder and Managing Director at Dream Design Property, a wealth creation mentoring program that helps Australians gain financial freedom by providing a personalised service tailored to their changing circumstances. Kickstart is the first affordable program designed specifically to assist Gen Ys to take their first step into the property market.