SB Financial signals 8%–8.5% 2027 loan growth as it targets a $2B-plus balance sheet

The article examines whether it is more advantageous for a property owner to keep their rental property or sell it and invest the proceeds. The property generates R32,650 per month in rent, with R46,000 remaining after expenses. The owner invests the net rental income in a balanced fund that returns 10% annually. The author weighs the benefits and drawbacks of keeping the property versus selling it.

If the owner keeps the property and invests the rental income, it would grow to approximately R5.2-million after 10 years. However, they would still own the property, which could be worth R5.5-million. This combined investment would amount to about R10.7-million.

On the other hand, selling the property would yield about R5-million, which would be invested in the same balanced fund and grow to around R13-million after 10 years. The decision hinges on the property's future value and the neighborhood developments that could negatively impact property prices.

The author advises considering the risk of investing in a single property, as property values or tenant availability could negatively impact the owner's investment. However, a balanced fund offers diversification, spreading the risk across different investments. Additionally, having access to the funds invested in a balanced fund is an advantage.

The author recommends speaking to a financial specialist to model the options accurately before making a decision. While there is a solid case for selling, particularly given the neighborhood concerns, the author suggests that property ownership remains a viable option if property prices continue to rise or outpace other investment opportunities.