If you plan to be a successful property investor, you’ll need to quickly create a mindset that investing in property is not a hobby. Establishing a property portfolio should be treated similar to a business. If you are new to investing this market insight will highlight the important aspects to investing better.
Owning an investment property can be very rewarding by offering a passive income through rent, while it grows in value over time. If you have money to invest or want an alternative source of income to support your living expenses now or into retirement, a buy-hold strategy can be very profitable. In order to buy and hold well, you need to approach this strategy as carrying on a long term business.
Before commencing a property portfolio, here are some tips on taking care of a successful property portfolio:
Get organised
Being organised, will ensure you meet your obligations on time every time. It may be organising your loan repayments, insurance or tax return. If you keep yourself organised by creating files and reminders such as checking the smoke alarms annually, will go along way to establishing a profitable income stream.
Furthermore, you’ll have a better understanding of the investment performance and/or returns. You’ll be able to review the income and expenses accordingly.
Your tenants should be seen as customers
In business, customers are who create your revenue. In property, your customer is the tenant. The tenant is what creates your revenue. Treat them well and you’ll find a happy tenant to be the best solution to a consistent income stream. They will also feel more obliged to take further steps in maintaining the property and perhaps improving it.
We haven’t met a client to date not wanting the income stream from their investment property. If you look after your tenant, you’ll also find a lower chance of encountering a vacancy. Obviously a vacancy means no income.
Research the property market
This is easier said than done. Taking Melbourne as an example, the metropolitan has tripled over recent times. A location that is 35 kms is now becoming the new norm for a 15kms radius a few decades ago.
Researching the property market has become more complex. Understanding population growths, vacancies, prices and capital growth prospects can also be time consuming. Many new buyers are now using buyer’s advocates. At Crest Property Investments, its our service to learn what you want and source it within your specific requirements. We do the due diligence on your behalf and ensure you’re buying the right property for you. A buyer’s advocate has made researching the property market much easier and less time consuming. Please note, as we specialise in new and off the plan property, we do not charge fees to our buyers.
Understand a landlord’s obligations and regulations
There are constant changes to laws and regulations. If you appoint a very good property manager, they will keep your portfolio managed in accordance to these changes. You can of course attempt to manage it autonomously, but the time needed to meet these changes are ongoing.
A property manager can be very influential to supporting your property portfolio and in-turn making it into a far more successful one.
Comparing property investment to a business, it would make sense to employ someone in a business to specialise in a particular are so you can devote your time on something else. This also goes for property investors. Employing a buyer’s advocate to help buy and a property manager to help lease are invaluable member to your gains.
Taxation
When we create a revenue stream, we must pay tax. Employing an accountant to assist you in generating the best tax return for you, will help your portfolio become more profitable. There are many different types of tax entitlements when buying/holding property. Tax depreciation is notably the most tax effective entitlement available.
The Australian Tax Office provides a guide and tips to help.
Always review your insurance
When investing in property, your initial reaction is ‘where can I make money?’. Buying a property is a big commitment, so you need to have a risk management strategy in place. Sometimes, property investment doesn’t pan out they way you want. Purchasing an insurance policy for building, contents (if necessary) and landlord cover will protect you from many unforeseen losses.
Setting up appropriate insurance is only part of your risk management plan. You will need to review this regularly to make sure its covered properly. Property prices change and so do building costs. You need to know how much it would cost to renovate or replace.
We are biased at Crest Property Investments. We believe property investment to be the most reward investment strategy that compliments many other forms of investment, including businesses. There are many advantages and disadvantages of buying an investment property. . As buyer’s advocates, we specialise in sourcing brand new and off the plan opportunities.
Feel free to contact us at anytime if you are interested in either establishing an investment property portfolio or to extend on what you currently have.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
March 2021
