How long should you hold onto an investment property to make a profit ?

 
12-02-2018
The majority of Australian’s have considered property investment at one point or another and many ultimately take the leap and jump right in. However, getting yourself into the market is only half the battle. The ‘investing’ part comes later, when you discover that along with all the money you have invested into the property, you also have to invest a reasonable chunk of time.

On average, Australian property owners will hold an investment property for 8 – 1o years. This tends to be slightly longer than the amount of time it has taken historically for the market to complete a full cycle of growth, which is then followed by a period of adjustment. Of course, the other thing you need to invest in your property is patience.

So if money + time + patience = profit, what exactly does that look like and how can you be sure to get in and out of the property market at the right time to achieve that goal? As with most things, the earlier you start the greater your final results will be, however not all of us have the capacity or resourcefulness in our early 20s to make property a priority. Having said that, the ideal time to get in can be totally unique to the individual and reflective of your longer-term property investment goals. If you can finance the commitment, the market is right and there are some good deals to be had, jump in! If you don’t have the money yet, work out what your financial commitment needs to be, start working towards your goal and begin to track the market and keep on top of what it’s doing. That way, when you do have the money, you’ll feel informed about when the best time is to buy in and you can get your entry timing right.

Regarding how long you should retain your investment propert, this is again unique to your circumstances. If the average is 8 – 10 years, this doesn’t dictate when YOU should sell up. If the market had risen considerably 5 years into your investment and you have other, stronger investment opportunities or goals in mind, then jump on potential while it’s there and continue up the property ladder. Conversely, if you enter the market just before a correction and the desire to sell arises, it’s important you get advice from a financial advisor and a real estate agent about the best options for you.

There are no hard and fast rules, the important thing is that you understand your individual circumstances, pay close attention to the market your property is in and keep in touch with your real estate agent for any inside word they can offer you on changes in the market. They may have a random buyer who has specific needs that they’re willing to pay for, and your property ticks all their boxes. Property investment is a slow race but a rewarding one, if you can maintain a steadfast commitment to your investment and remain cautiously optimistic throughout market cycles and as different opportunities present themselves.

The key point is that the Australian market is relatively stable, so if you invest well, set yourself a reasonable time period to watch your investment grow and exercise patience through the turbulent times, you can ride out the rough patches and reap rewards. More often than not, investors come out with a nice profit at the other end, to then spend as they wish or, better yet, invest in their next property goal!