The recent season of The Block saw celebrity bidders spend way too much money on the show’s featured properties.

This has become standard for the renovation show over the years.

But way back when it first began in Bondi in 2003, the apartments sold for between $650,000 and $750,000.

At the time, it was considered a huge result, but these days, those same apartments would likely be worth $2 million plus.

It serves as a reminder that the best way to build wealth is usually to hang onto your properties and rarely to sell them.

Because once you sell them, that’s the last money they will make for you. Their future value gain and rental income will never be realised.

It might feel like you’ve missed the boat, but one day, $2m properties will be worth $10m and you’ll have wished you didn’t sell them back in 2024.

Investors are selling up 

There has been a major increase in listings recently and a significant proportion of those have been from investors fleeing the market. Interest rate hikes, tenancy reforms and government proposals to hike taxes have begun to take their toll on investors.

Some are no longer able to service their loan, others are staring down the barrel of tax changes turning their portfolios from positive to negative and others are just sick of the hassle.

But, while the RBA continues to delay cutting rates, it’s important to remember

that markets will fluctuate and conditions will change.

If you can hold onto your asset through times of uncertainty, it may pay off when you come out on the other side.

 

Don’t swap growth for decline

History tells us that property is an appreciating asset, while cash depreciates in value everyday thanks to inflation. In fact, cash is only worth something because the government says so, there is no inherent value.

The day you sell your property; you begin to lose money. While if you hold it, you are accessing future money far greater than the debt you owe on the asset.

Even when selling conditions are good, you will earn less by selling now than if you held for another price cycle or two.

 

Tie your wealth to inflation

Not only does your value increase over time against a debt that reduces or at least remains static, but your rental returns increase over time with inflation.

Rents have risen by huge amounts over the years since Covid and rent is still one of the stickiest parts of inflation that is keeping the cash rate high.

Vacancy rates remain at historic lows meaning upwards pressure remains on rents.

The rental income your assets can earn will certainly increase over the coming years. That alone may prove the difference for some people battling to hold properties. If you sell now, that is even more future money you are giving up. 

 

Reasons to sell

Sometimes, it actually does make sense to sell your investment property, you just need to make  sure you’re doing it for the right reasons.

Say you bought a property at the bottom and it has experienced a great growth cycle, selling it could allow you to buy 2 other properties at the bottom of their markets with greater upside for value growth and potentially a much higher rental return. You might have a place worth $400k and are getting $500 a week rent on it, but you can leverage into 2 properties, each renting for $400 a week, then you’ve boosted your return by $300 a week and accessed a double chance for further growth.

Another good example is often mentioned by B Invested founder Nathan Birch, where the investor accumulates 10 properties over time and then after a period of growth sells 5 of them to pay off the debt of the remaining 5. Then you are left with 5 unencumbered properties in a portfolio, returning a passive income and accumulating further value.