Should you sell a ‘dud’ property?

A client came to me wanting an assessment of their property portfolio.

They had a portfolio worth about $2 million that they’d been building for nearly a decade.

I suggested they should sell one of their properties.

Property A:

Purchased in 2017 for $420,000, recently valued at $820,000. Total growth of 95.2% or 10% per year.

Property B:

Purchased in 2016 for $640,000 and currently valued at $1.2 million. 87.5% total growth or 8.2% per year.

Property C:

Purchased for $380,000 in 2015 and now valued at $550,000. Total growth of 44.7%, or 4% per year.

I told the client they should get rid of property C. 

While it’s done OK, it’s actually underperformed the others and the overall market by 50% over that period of time.

Bad assets don’t get any better. 

Plus the opportunity cost to hold them is massive.

I suggested they should cut their losses and go out and find a property with more upside potential.

Do you agree?

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