Should I sell my investment properties?
This one comes up a lot, especially for people looking ahead to retirement.
For generations, property has been the go-to wealth-building strategy for Australians. It's understandable why. You can see it, touch it, and drive past it. There's something psychologically comforting about bricks and mortar.
Property is certainly a way to build wealth. But it's not the only way.
If holding onto investment properties is draining your lifestyle, keeping you up at night, or stopping you from actually enjoying life, it's worth a closer look.
The case FOR holding onto investment properties:
Potential capital growth - property values can (and historically have) increased over time.
Rental income - a steady stream of cash flow, assuming you've got good tenants.
Leverage - you can borrow against property to build wealth in ways you can't with other assets.
Emotional connection - maybe it was a first home, a family property, or somewhere that holds years of memories and effort.
The case AGAINST holding onto investment properties:
The "income" might be an illusion - $32,000 a year in rent sounds great. But subtract the mortgage interest, property management fees, council rates, insurance, maintenance, and emergency repairs... what's actually left?
Liquidity (or lack thereof) - need $50k for a big trip or to help the kids? You can't sell half a bathroom. Property is all or nothing.
Stress and headaches - tenants, repairs, vacancies, compliance requirements. It's not exactly passive income.
Concentration risk - if most of your wealth is tied up in property, you're betting big on one asset class in one location. Diversifying means you're not all-in on one basket.
Opportunity cost - that equity sitting in property could potentially be working harder (and with less stress) elsewhere.
What are the alternatives?
Selling an investment property doesn't mean the money sits idle. There are other ways to generate income and grow wealth:
Superannuation - tax-effective, especially in retirement phase, where earnings can be tax-free.
Diversified investment portfolios - shares, bonds, managed funds, ETFs. Spread your risk across industries and countries.
Account-based pensions - turn your super into a regular income stream.
Annuities - guaranteed income for life (or a set period). Peace of mind has a price, but for some, it's worth it.
Term deposits or cash - lower returns, but zero drama.
A real client example:
We work with a couple who came to us with 8 investment properties. It's a property portfolio most people would envy. Except that most of those properties were mortgaged to the hilt. The rental income barely covered the costs, and they were stressed about maintenance, interest rates, and dealing with tenants.
They were asset-rich and cash-poor, unable to enjoy their wealth because it was tied up in bricks and mortar.
By selling a couple of their properties, they unlocked equity they could actually use. They paid off debt, boosted their super, set up a diversified investment portfolio that pays them regular dividends, and most importantly, have breathing room to enjoy life.
The bottom line:
Property can be a brilliant wealth-builder - but it can also be an anchor. The real question is whether your property portfolio is working for your life right now.
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