View your property portfolio as a business

View your property portfolio as a business

Regardless of whether you have one, three, five or more investment properties, now is the time to evaluate what you want from your portfolio for the financial year ahead. 

Many people simply tick the property investment box once purchased and hand the responsibility over to a property manager – this isn’t enough.  You need to manage your property as a small business and review it on a regular basis particularly leading into a new financial year.

While property managers handle the day-to-day running of a rental property, you need to keep in mind that most are not investors and as such they are not going to ask the tough questions that need to be asked on no less than a biannual basis.

Don’t ‘forget’ about your property investment as the years go on.  Take a proactive approach and question whether or not money should be re-invested back into the property through renovations and improvements or whether there is enough equity in the property to buy a second or third investment.

Here are a few things to think about as you assess what you want from the year ahead:

  1. VIEW IT AS A BUSINESS - If you want to maximise the return on your investment you must ensure you are receiving the best return possible on it.  Make sure your property manager undertakes regular rent reviews to ensure you’re receiving market rent.  Regardless of whether you have one, three, five or more properties you need to treat them all like an individual business. 

  2. MAKE SURE YOU’RE HAPPY WITH THE PROPERTY MANAGERS - Inspect your investment property every one to two years and make sure you’re delighted with the property manager’s service and how they’re managing the maintenance of the property.  Read your six monthly inspection reports and ask questions as to the condition of the property.  I also think it’s a good idea to mystery shop a few property managers before you decide on one. 

  3. ARE YOU GETTING THE BEST INTEREST RATE - Lending institutions are keen to compete for your business and so you should shop around to see if you really are getting the lowest interest rate available in the market.  A drop of even 0.25 percent will save you thousands of dollars over the life of the loan but be sure that the conditions of the loan also marry in with your future plans. 

  4. ARE YOU PLANNING TO ADD TO YOUR PORTFOLIO - Make sure your financial plan is on track to meet your retirement needs and includes the timings of when you want to buy more property to build up your asset base.  If you’re due to add to your portfolio in the next 12 months then start getting your finances in order now and determine the equity you have in your existing properties so that you know how much you have to draw on for a new purchase.

  5. INVEST IN A GOOD ACCOUNTANT - Invest in a good accountant to maximise all legal deductions and make sure you have a depreciation schedule.  Ask them if there are any financial changes that need to be implemented at the start of the new financial year to make it easier to achieve your property plan for the coming year. 


Categories: Investment Property