This month’s blog looks at how you can prepare your property to ensure that your important asset provides incredible results for the new financial year.
Manage your expenses
This is an area where cutting certain corners can be good for you. Start with your greatest expense, usually it’s your home loan repayment and see if your rate is competitive, a 50-basis point saving on a $500,000 loan is $2,500 your pocket annually but be wary of honeytrap rates that appear low but catch you with annual fees and other charges. Typically, you are stuck with your Council and Water Rates, however with the former you can contest the rates if for whatever reason they are not in line with market, and potentially reduce the overall cost.
Look at your insurance as well, the level of cover and excess can be tweaked to adjust your annual premium but remember to not be underfunded as a small saving in premium is not worth a large loss in a potential claim. Other areas such as management fees and accountant fees can also be considered, being competitive is important however a good property manager or accountant can save and return you money far greater than the fees you pay as we will discuss a little later.
Increase your income
Having your rent at or above market levels is critical to growing your investment portfolio, a good property manager can guide if you are unsure what that level should be. Maintaining and investing in your asset to an appropriate standard is also important, whilst spending more money may seem counterintuitive, a well-maintained property ensures that you can command a higher rent and hold onto good quality tenants saving you in the long run. Renovating is a crucial way to stay ahead of the game, we have blogged previously here http://www.directpropertygroup.net.au/2017/06/ and can show you examples of how a small to medium investment can yield impressive results in circa three years. Look at your home to see what low cost way that you can improve it, see if you can create an additional bedroom by simply putting up a wall or by getting rid of an unused spa bath. This will turbo charge your returns.
Utilise a property manager/professional
As mentioned earlier, a good property manager or accountant are critical to getting the best performance out of your asset. With regards to an accountant, knowing what can be claimed, asking you to obtain a tax depreciation schedule where applicable and pre-planning are all extremely important to ensure that you get a great tax return. And don’t despair if you think you may have missed something in the past, you can go back up to two years to claim what you may have missed. With regards to a tax depreciation schedule, a skilled quantity surveyor can ensure you don’t miss any deductible item and this can really add up over the long term. Some people consider who is the cheapest to be the main criteria when selecting a property manager, but there are a number of reasons why nearly every time this is not the best strategy.
First of all, no business owner will give great enough attention to their cheapest client and they certainly won’t put enough their resources towards them either. It means that you usually will get an under qualified agent who themselves will be underpaid and when an employee is undervalued and unappreciated the work suffers. Understanding marketing and leasing so that your asset gets leased quickly is also important, a one-week delay in leasing means that the cheapest agent is no longer the cheapest.
Quickly undertaking repairs so that they don’t cause further damage and therefore a greater repair cost, understanding how to spot issues before they occur is a very underrated skill that is the difference between a planned work or an after-hours emergency that escalates the cost. Knowing market rates for repairs, using skilled tradespeople who fix it right first time and the list goes on for why a great property manager is key to your assets performance.
Talk to us about your investment and how we can help your asset have its best performance this financial year.