When it comes to purchasing and managing property, there are countless factors to consider.
These include but are not limited to the timing of purchase, location, property type and financing options.
Of course, these areas are also affected by market variables such as interest rate rises and median property values, changes to your financial circumstances and the ongoing costs associated with maintaining your investment property.
That’s why so many Australian property investors (more than 70 per cent) get stuck at one property.
So, how do the roughly top 20 per cent of property investors achieve their success?
Set and maintain a clear strategy
They avoid hype and unsolicited advice and apply proven data-driven investing strategies.
Attending strategy sessions with industry-specific financial planners is one step towards turning expert knowledge into wealth-creation strategies.
Commissioning a reliable and reputable managing agent is money well spent for the investor. This allows you to take care of business while keeping a watchful eye on the managing of your property portfolio.
Have your managing agent pay bills out of the rent
Most property managers will offer a free service to pay any bills – such as strata fees, council rates, rental provider/landlord’s insurance and maintenance expenses – out of your rent, and then deposit the balance to your account each month.
This creates less work for you and will also make tax time easier. The managing agent will provide yearly rental statements from your property manager with all your income and expenses.
Understand cash flow
In a low interest-rate environment, you may find your investment has positive cash flow after the yearly tax deductions of expenses and depreciation.
However, you may find the holding costs throughout the year are negative, and would therefore need a buffer to maintain the investment before your yearly tax return.
Build upon your strengths
Alternatively, you can ask your accountant for a tax-withholding variation form, to adjust your week-to-week tax to reflect your allowances for owning the investment — and receive the return immediately in your pay cycle.
Some find this helps with cash flow throughout the year. A word of advice if you are serious about building your property portfolio: you must save, rather than spend, extra or unexpected cash flow if your aim is to expand your investment portfolio.
Your local estate agent can help with trusted advisory sources and may even offer in-house financial property management services.
Start planning for a solid financial future with the right property investment strategy and the long-term benefits should duly follow.