My Property Investment Tip #15
Now this rule is more of a philosophy than a hard and fast rule, as it should be thought of BEFORE you even buy a property.
Now first of all, when you sell you go backwards. Assets make you richer, and if you’re selling, you’re reducing your wealth creation ability, not increasing it.
When you sell you ‘kill the goose that lays the golden eggs’. You ‘chop down the apple tree’. You slaughter the dairy cow. You will realise a lump sum from the sale, but you will NEVER make a dollar from that property ever again.
Also, perhaps more importantly, when you sell the tax man gets you! (except if you sell your own home)
When you hear about the ‘old money’ families, where do you think that old money comes from? It comes from NEVER selling. They acquire real estate and then keep it in the family for generations. In fact, it’s a great shame if you ever ‘sell the farm’ because you have failed to retain the family’s assets from careless management. Many wealthy families will even exclude family members who can’t be trusted with money from managing the family estate.
So when you buy, you should be doing so with the intention of never selling. Set the property up and get it paying for itself. As time goes by, it’s income will outstrip is bills and you’ll have a passive income… forever.
People sell because they don’t understand how to get the money out of the property. But there are ways to get money out of a property without selling. If the property is going to receive rent forever, it can therefore service an amount of debt forever. So rather than sell, just refinance it and let the rent pay the new loan off in time. Way better than selling and losing all possible future capital growth.
The only time it is acceptable to sell, is when you are either:
1. Fixing a very bad property purchase.
2. Or upgrading the asset to a better one.
In all other circumstances, selling means you’re going backwards.
Selling is the only way to guarantee a loss. Be patient and let time work its magic.
The older you get, the more you’ll regret any decision you made in your past to sell a property.