Successful property investment, leave some for the next person!

Successful property investment, leave some for the next person!It may seem strange to advise selling your property assets with sufficient margin for a buyer to make money but the reality is that the best time to sell property is when demand is at its highest. Surely this is common sense? Sell into a strong market and by in a weak market?

This may be common sense when you read it in an article or someone discusses it with you but there are many property investors who let their hearts rule their heads, buying too early and selling too late.

Always have an exit strategy

The idea of buying property investments to increase cash flow, increase the long term value of your assets and eventually sell for a large profit is what everybody aims for. The ability to buy at the bottom and sell at the top is the holy grail of any investment market not just the property sector. However, it is very easy to get wrapped up in the moment, to become greedy or become trigger-happy and buy too soon.

If you go into any investment with a long-term plan, something you can stick to, then the chances are that in good times and the bad times you will survive to fight another day. The trick to any investment is buying as near to the bottom of the market as possible and selling as near to the top as you can, BEFORE the market turns.

Selling before the peak

The best time to sell a property is when prices have moved ahead, but not peaked, and you believe they are stretching the fair value formula. The fact is that once the property market peaks and begins to turn downwards then you will see a flurry of sellers looking for a fast sale. This will place pressure on prices, attract more and more sellers and create what could become a very quick acting self-fulfilling prophecy.

This is why it is sensible to sell when there is still demand for property, when your potential profit (or you may be crystallising a loss) is acceptable and you are looking to reduce your exposure or perhaps there are better opportunities elsewhere.

Human nature encourages greed

If you look back at worldwide property cycles of years gone by, or indeed any local real estate market, you will see a number of general patterns where real estate markets are oversold and overbought. It may not appear so at the time but if you take a step back and look at the cold hard facts and figures it is not as difficult as some would have you believe to identifying potentially oversold or overbought situations. The bottom line is that you will never buy at the bottom and you will never sell at the top but if you keep trying to do so you may miss opportunities and you may even significantly reduce your financial strength.

History shows us that those investors most successful in the property market (this strategy also works in other investment arenas) are those who buy assets with an exit strategy in mind. These are the kind of people who are also willing to take a loss in order to maintain their finances, are happy to sell before the property market peaks and manage to avoid what is potentially the most damaging human emotion, greed. Always leave something for the next person!

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