Investing in property is a long term prospect measured in years if not generations. However, as with every investment, there needs to be some kind of exit strategy; some plan on how to realise your return on investment. For some, it could be as simple as buy, build and sell. A shorter term strategy based on turnover that often works well when the market is moving upwards. For those who buy, build and keep, the exit strategy becomes more of a long term endeavour.
How and when you ‘exit’ a property from your investment portfolio will be based on both your current and future circumstances. Having a plan in place will help you to establish a set of trigger points that will determine how each property is dealt with. For example, it may be beneficial to offload older properties from your portfolio and replace them with newer stock in better locations. Your exit strategy may be to determine a timeframe, say 7-10 years, that gives you a window to sell older stock when the benefits of holding it are minimised but the capital gains are reaching the peak for that market cycle. Rolling over properties in this manner enables you to realise the benefit of your initial investment while also providing the means to reinvest in a better opportunity.
For some investors, their property portfolio is a legacy to be left for future generations. Without sounding morbid, nothing in life is certain except for death and taxes. Having a clearly documented exit strategy for these properties will allow loved ones to realise your legacy with ease and efficacy. There is no point building an empire just for the lawyers and government to get the most benefit from it.
As with any investment, it is essential that you have a team of experienced professionals to guide you. Building a relationship with your financial planner and accountant is vital in being able to realise the greatest returns on your investment, in both the short and the longer term, when you decide to implement your exit strategy.