After accumulating nine real estate assets over the years, property investor Kevin Sum decided to sell two of his investment properties which, he believes, have reached their peak in terms of wealth-creation potential.
One of the properties he sold was a two-bedroom unit in Sydney”, which housed a new tenant for a month or so before the sale. According to Kevin, part of his strategy was to maintain stability for the insurance of cash flow, which is why he signed a one-year contract with the tenant even when he intended to sell the property at some point., a “vibrant area at the centre of
He explained: “I was thinking … ‘If I'm going to appeal to investors, I might as well think from an investor point of view, and ... a lot of investors, they like stability.’ ”
“So, basically, I signed a one-year lease with the tenant, which is kind of risky when you're trying to sell a property because you know that basically, homeowners would be out of the market, but I guess that's the risk that I took and it worked,” the property investor added.
Kevin bought the Granville property in 2009 for $258,000 and decided to list it at around $470,000 to $500,000. After a few negotiations, the property ended up being sold to a fellow property investor last year for $475,000.
Smart Property Investment’s Phil Tarrant believes that any property is bound to be sold as long as it is priced appropriately based on market dynamics. However, “priced appropriately” might mean different things to different people.
One of the most common mistakes of property sellers is overestimating the value of their asset, which is why it’s important to do research and seek the assistance of local real estate agents in order to make an informed decision rather than a greedy one.
“People who are selling properties think their property's worth a lot more than what it's worth and people buying property think the property's worth a lot less than what the [seller] thinks,” Phil said.
In Kevin’s case, looking at comparable properties in the same area gave him a good idea of the market value of his asset.
He shared: “I saw two very similar properties on the same street—one sold for $430,000 … and one sold for $465,000, [so I thought, ‘$475,000 is pretty good.’]"
Kevin currently holds a seven-property portfolio, and after selling two of his assets, he’s planning to acquire more properties which will provide “greater utility of [his] money”.
According to the property investor: “At this stage, I'm still looking at Brisbane, maybe the $250,000 to $400,000 markets—it's no more $250,000 in the places I'm looking at."
“[I’m also considering] Sydney, if I can find something good, like something which is a real bargain,” he added.
At the end of the day, it comes down to formulating a strategy which will help him achieve his specific financial goals. After all, there’s no one path to success in an industry as unpredictable as property investment.
“[You have to understand] what your objectives are in investing—[whether] you're looking for cash flow … [or] capital growth. Everyone's circumstances are different,” Phil concluded.
Tune in to Kevin Sum’s episode on The Smart Property Investment Show to know more about the boxes your property should be ticking and the opportunities you should be jumping on.