This is something that depends on your own circumstances. Remember that we are not now in the sort of market where you will naturally see a price rise after holding for a while. This is a flat market where the prices generally stay static. They might rise a bit and then fall a bit, but generally they'll bump along for a few years now until the next boom starts. So whether you sell or hold is your own decision, based on your finances and your investment portfolio.
You might find that you need that extra bit of cash, so you'd be better off selling. Then again, if you bought them at the top of the boom you may have paid too much for them and if you sell now you'll make a loss. Remember, if you decide to hold, it will be for a few years because the boom won't come back in six months time, so ask yourself if you can afford to hold for at least five years.
If you can't afford to hold for that long, it might be best to sell off now before the property starts to cost you even more. Another question to ask yourself is: "Will the property increase in value over the next five years?" If it won't, there's no point in keeping it.
When considering this question, look at the surrounding neighborhood. If it has good access roads and infrastructure, good schools and shops, parks and gardens and the people are renovating their own homes, then the likelihood of values increasing there is good. On the other hand, the place may only be booming because some factory there that is expanding. In five years time if that factory has stopped expanding and is maybe even closing down, then what is going to happen to all those houses? The area will become something like a ghost town, with values at rock bottom. It doesn't hurt to do a bit of research into the history of the area to see what has caused the place to expand and increase in value.
For the person who has several investment properties, it's a good idea to sell four out of five and keep the quality one that will be worth heaps more when the prices stat to rise again. You make money both ways in real estate. You buy to flip and you buy to add value and hold a while. Real long-term wealth comes from buying quality property and holding it, but by playing both sides of the game you make extra money.
You can get a greater cash flow and use it to reduce your risk through debt exposure if you sell four out of five properties. Always try and keep a loan to value ratio of about 70% to 80% of the values. So if your house is worth $400,000, then your loan should be in the vicinity of $320,000. That way, if you are forced to sell at say, $340,000 or even $330,000, you have enough to cover your loan with a bit left over.
Just remember that winning in the real estate game is not about buying the most properties in the shortest time, now even about making a killer profit on every deal. It's about creating a core strategy that will work in today's market and every market, whether it's a flat or a boom time. You've got to stick to that core strategy through thick and thin and only do those things that will maximise profits and minimize risks. That's the way to become successful in real estate.
You should feel this way about your personal investment in the stock market as well. You should feel good when the stock market is increasing, and you should be worried when it starts to drop. But let's repeat the most important part: you should be worried, not freaking out, when the stock market starts to drop.
If you were trying to lose weight and you had a few weeks where you didn't lose a single pound, throwing in the towel wouldn't help you lose any weight at all. If you wanted to keep losing, you would have to keep eating right and exercising through those rough weeks of weight loss. Ironically, it is the same way with your investments.
It might be hard to see your number go down instead of up for a while, but you have to learn that it is okay. Now let's compare your body to your retirement fund. Just as you will keep counting calories and cutting back on sweets and soda, you need to keep feeding your retirement account.
Everyone planning to retire should have some sort of retirement account, whether it be an IRA or a 401(k) or any other type of retirement account. When times are great and when times are rough, you always have to feed your retirement account.
Set up a direct transfer from your checking account to your retirement account and have the same amount of money transferred each week or month. This will keep your retirement account building with out having to remember to take care of it. This is a great rule for those in their 20's and also for those that are 58.
The only rule of thumb about investing that depends on age is risky investments. If you have more than ten years until you retire and plenty of cash to invest, go ahead and do it. You should have plenty of time to ride the market out, making your risky investments well worth the wait.
If you are planning to retire in the next three years, you are probably best to put your money in your retirement account. You wouldn't want to be stuck living on a little while you wait multiple years for your risky investments to ripen.
Besides the mandatory retirement that everyone should have, we should all have other investments spread out through a variety of stocks and bonds. If you are unsure about how to invest your funds, you can use the help of a financial advisor or other investing firm to help you spread out your dough.
Just like we all need to keep exercising and eating right to keep our bodies in shape for retirement, it is important that we keep out heads up with our finances too. Don't get afraid and jump out of the market just because it is scary. Hang on and ride it out, and find a better time to cash out your investments.
Both Sal Vannutini & are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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