Should I sell my investment property?

Should I sell my investment property?

This is a big question that many people face as they move into retirement and as much as you might want to think otherwise the answer is always yes and I mean always.

Property can be a great wealth creation vehicle. I often ask new client's what their best investment decision has been until that point and always people say, buying their own home.

The next question? What was their biggest investment regret? Again, the answer is always the same, that they didn't make the effort to buy the house next door at the same time.

There is no doubt, that if held for the long term, the value of holding an appreciating asset combined with the beneficial impact of negative gearing, can create a handy nest egg.

As well, there is always the belief that property prices always climb higher, and that the rental received from tenants will help to slowly pay off the mortgage attached to the property.

More, people just like the security of bricks and mortar. It seems relatively fail safe compared to the ups and downs of the share market and you don't have to worry that a house will suddenly go bust as can happen to a listed company.

So, it can be a hard decision as you move into retirement to take that big step and sell an investment property, when on the surface it appears such a solid steady investment that has stood you in good stead for years.

This is more so in current times when many people think they may have missed the high point of the property market and that they should hang-on until conditions improve.

However, there are three facts that even the most ardent property investor cannot deny.

Firstly, the income returns on property investments, particularly residential property investments are typically between two and three per cent and that is before you take out all the management fees.

Yes, there are always exceptions to this, but by and large the rate of return is so low you just can't live on that type of return and retirement is all about generating enough income.

Secondly, no matter how good the property, no matter how good the managing agent, no matter how good the tenant, there is always time and bother tied in with owning any investment property.

Compare this to having your assets well managed within a superannuation account paying you a steady amount every month and where you never had to lodge a tax return or pay tax ever again.

Finally, investment properties are big lumpy investments. If you decided you want to splurge in retirement and perhaps spend $20,000 travelling overseas, you can't just sell $20,000 worth of your investment property to get those funds.

Yes, you can draw down on a loan against that property but that's just the start of the problems in terms of arranging that loan and managing that loan and paying the interest charges against it.

Once you move into retirement, once your funds are safely within a well-managed superannuation account, you have the flexibility or drawing down additional funds when and as you need them with no more inconvenience than making a telephone call.

This is why as you move into retirement the answer to your question should I sell my investment property is always yes.