Investors considering selling one property and buying another need to consider the high costs of those transactions.
Mark Shorrock, Managing Director of Bluestone Property Management, says the best strategy for most investors is accumulate assets in a growing portfolio of properties, rather than trading in real estate.
One of the key reasons is the costs of buying and selling – and buying again.
“If you’re thinking about selling your investment property, it’s worthwhile considering not only the costs associated with selling the property, but also the out-of-pocket expenses you incurred during the purchase of the property,” Shorrock says.
The transaction costs can seriously erode any capital gains made while owning the property.
A further impact comes from the costs of buying a new property to replace the one sold.
Shorrock provides this case study on a typical property purchase and sale value of $500,000:
Sale Of Investment Property
Agent Commission (Based on 2.75% inc GST): $13,750
Advertising: $ 3,000
Legal Fees/Conveyancing Fee: $ 1,000
Total costs: $17,750
Investors also need to consider the $16,494 in out-of-pocket expenses they incurred to purchase that investment property:
Purchase Of Investment Property
Stamp/Transfer Duty: $14,175
Transfer Fee: $1,132
Mortgage Registration Fee: $187
Legal fees/Conveyancing Fee: $1,000
Total costs: $16,494
Total Expense To Turn Over Property
Purchase of Investment Property $16,494
Sale of Same Investment Property $17,750
Total costs: $34,244
Shorrock says that if you’re selling one investment property to purchase another, you can expect to add the additional costs of that transaction, bringing the overall total of purchase/sale costs to $50,738 ($16,494 + $17,750 + $16,494)
We hope that this open and transparent information helps you make educated, well informed and calculated decisions about selling your investment property.
NOTE: Mark Shorrock joins Hotspotting founder Terry Ryder in a free webinar “Why a good property manager matters more than ever – and a worth every cent”
Bluestone Property Management & Sales is the real estate agent that savvy Investors use when renting out their rental property/properties in Brisbane Queensland (QLD). Why because Bluestone’s Property Managers maximize the rental yield and minimize the stress involved in managing their units, apartments, townhouse and houses. Additionally, Bluestones Property Management Fees (commission charges) provide excellent value for money, so if things aren’t stacking up with your current agency give the Team at Bluestone a call.
Disclaimer The information provided by Bluestone Property Management is of a general nature only and is not intended to constitute legal advice under any circumstances. Individuals should consider their own circumstances before proceeding to rely upon any information provided by Bluestone Property Management. Whilst care has been taken in best practice advice provided, and the information contained in it has been obtained from sources that Bluestone Property Management believe to be reliable, Bluestone Property Management (including its directors, officers, employees and contractors) does not warrant, represent or guarantee the accuracy, completeness or fitness for purpose of that information. Bluestone Property Management (including its directors, officers, employees and contractors) accordingly does not accept any responsibility, liability, loss or damage whatsoever resulting from the use of the information provided. By using the