Keeping your Portfolio in the Black

Property

There are three key elements to ensuring your portfolio is performing at its best.  We take a look at these three important considerations that all investment property owners should be considering every 12mths.

With every 12month period in the residential marketplace, conditions will vary and the result on your portfolio can be a loss of performance.  By loss of performance I mean a loss of profitability from an optimal position.  It is never to late to review your investments performance to ensure you can make changes early.

Key times for review would be:

  • End of financial year
  • Change of tenant
  • Mortgage or loan anniversary.

The items to be reviewed should always be:

  • Review your borrowings
  • Review the rental price
  • Review all claimable items

Review your borrowings

Lenders are always adapting loan products to attract new business.  New loans get all the benefits of interest only options, introductory rates, additional off-set accounts, etc etc, so it makes sense to ensure you are in the best product for your circumstances.

A properly structured finance strategy can save you thousands in interest and fees.

Interest rate movement will catch put the lazy investor.  It may be that the market rate is falling and leaves you behind or more regularly, your rate will rise whilst the market rate stays the same or falls.

Speaking to the team at Launch Money and receiving a no obligation loan review should be the top of your list.

Review your rental price

Tenants are a mixed bunch and to some degree tenant movements are a part of being an investor.  If you can’t cope with the incoming and outgoing of tenants, then maybe residential property isn’t for you.

In saying that, setting a rental price that is close to market and equally attractive to good tenants, can avoid the 1-4 weeks per annum of no rent.

All investors should be aware of market conditions by monitoring the leasing portals for the area.  Property managers will generally err on the side of keeping a tenant as it avoids the work involved in securing a new tenant.  So, speak to others in the area, maybe even attend a few open homes to ascertain where your property sits in relation to those around it.

The condition of your investment is also a key to getting the best possible rent, a change in tenant is a good time to refresh paint, carpet and window furnishings.

My rule of thumb has always been better a tenant $20 less than you want than an empty property.

Tax deductions

All investors will be aware of the standard tax deductions available to investors.  Any expenses incurred in the process of acquiring an income are legitimate tax deductions.

Well the ATO have placed a few caveats on that statement, for example, flights and accommodation to inspect an interstate property are no longer deductible.

Depreciation of Capital works and plant and equipment is often overlooked as a tool for managing the holding costs of an investment.  Investors purchasing brand new property can claim both Capital works and Plant and Equipment deductions for the property’s effective life of 40 years.  Investors purchasing 2nd hand property after May 2017 can only claim Capital works.  The exception is that if renovations are completed post the purchase the plant and Equipment specifically within the renovation can be claimed moving forward.

This can get complicated, so trust that the tax team at CXC Financial Partners can assist with your questions.

When each of the three items detailed above are reviewed annually or at the change of a circumstance, you can be assured the property is performing at its best.

If you would like some assistance reviewing your portfolio, Launch Properties can provide a full report outlining the performance and any areas of concern.  See our advisory page on this link:  Portfolio Review Service

To speak with a property expert, call our team on (02) 9009 2428 or email:  info@launchproperties.com.au

Apr, 12, 2018

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