Here are six tips to keep you on your toes, while keeping your property investment strategy working for you.
On the go? Here’s 30 seconds of take outs:
- Like reaching your goal weight or achieving your desired level of fitness, once you’re there you can’t just rest on your laurels and get lazy or you’ll undo all your hard work before you know it. Your property investment is the same.
- You’ll need to proactively review and manage your investment property to ensure you’re tracking positively toward your goals.
- Fortunately, there are loads of free property market data and tools to help you review your investment property and make decisions about how to optimise your strategy. Alternatively, call us at Capital Properties! We’ll save you time, stress and put cash flow back into your budget.
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Signing up to a gym membership is a waste of your money if you’re simply not using it. Property investment works on the same principles. You start with a vision of where you want to get to, and your personal trainer works with you on a plan to get you there.
Once you reach your fitness or body shaping goals, you need to commit yourself to the lifestyle changes you’ve introduced and stay on track with a maintenance program.
Same, same if you’re a property investor. While the hard work is done up-front through to settling on that first property, you will need to commit to keeping a close eye on your investment strategy and actively optimising the benefits and opportunities available at any one point in time.
- reviewing your property investment[s] regularly
- monitoring capital growth and unlocking equity at the right time
- maximising your rental returns
- ·optimising your tax reduction strategy for maximum cash flow
- submitting a tax withholding variation
- securing your credit at the top of the top of the property cycle.
Windows of opportunity for leveraging equity come and go. The key is knowing when to hold, and when to grow. There will be times that your borrowing capacity will be maxed out. There will be times debt servicing is good for your next deal, but the limiting factors could be your available deposit or equity. As population growth, the economy and the political climate change, you’ll need to make sure your strategy can weather the changes.
Review your property investments on a regular basis
Staying close to how your property investment is working for you will reduce your anxiety, optimise your cash flow and make you feel like you are still in control of your financial future. The following strategies all feed into this one.
Remember the game plan here is to keep you moving towards your ideal lifestyle and goals.
Monitor capital growth to consider unlocking equity
You must have a steady source of reliable property data at your fingertips to help you track the property markets. This is part of your trade as a switched-on property investor. If you need a refresher, invest some of your time in reading my blog article Switched on Strategy Series 1.
Tracking macro trends
Set up an alias email address for each of your properties and subscribe to my Capital Properties’ Australian Property Market Report. You’ll find this under Resources Tools > Free Property Market Report. This is a well sourced monthly report based upon some key market indicators. Check out how each of your properties is performing based on capital city markets.
Tracking micro trends
Once you’ve got a good snapshot of the macro view of the property market, you can drill down and get more specific in terms of the suburb where you have invested. There are a bunch of free tools out there to give you a good idea where things are up to.
A great place to start is the REA (realestate.com.au) website or app. Go to https://www.realestate.com.au/neighbourhoods/ and search the suburb where your property is located. You’ll find suburb specific details including:
- median property price
- supply and demand
- demographics about the people and lifestyles
- latest listings.
Use my Capital Properties > Resources & Tools > Investor tools & apps > Property Selection Criteria to then benchmark the area’s performance.
Another great free tool is the Residex website. You’ll find a Free Suburb Report. When you type in your property’s postcode the first time, you’ll need to fill in registration details. You’ll then be emailed a PDF of a suburb report, which offers great insights on demographics, median house prices, market activity and statistics.
If the property market is performing well and demand is high, it may be time to talk to your property investment consultant at Capital Properties to explore the viability of unlocking some equity to grow your portfolio.
Maximise your rental returns by reviewing every six to twelve months
A good time to review your rental income is at the end of lease. Talk to your property manager to get a feel for the rental market and price expectations. Your property manager is your eyes and ears on the ground. They live and breathe the market conditions first hand which is particularly important if you aren’t working or living in the same state that your property is located in.
A great investor tool is the SQM Research website. SQM offers tonnes of free property data to give you some key insights.
For example, go to SQM > Free Property Data where you’ll find a bunch of free indices via post code including:
- Sold Property Records
- Property Rental Yield
- Asking Property Prices
- Weekly Rents
- Total Property Listings
- Vacancy Rates
This freely available data is great for researching where the rental market is at. It means you can consider if there is any scope to increase or reset rental rates to market while minimising the vacancy between tenancies.
Optimise your tax reduction strategy for maximum cash flow
Maintain a detailed financial spreadsheet for your property. Track property expenditures and rental incomes as the property management statements come in. By staying on top of incomings and outgoings, you’ll know what your cash flow is at any point in time.
Use a property investment tax check list. Check out my Capital Properties’ blog post > Are you getting ready for tax time?
Here are three steps that will help you stay on top of your property investment tax benefits:
- Be a good keeper of records. Get good at keeping documents per property ship-shape every tax year.
- Run a property investment spreadsheet that includes a taxation checklist.
- Engage an investment property tax accountant specialist.
Let’s see how well you understand your financial position. Take the Capital Properties’ Property Investor Quiz.
Submit a tax withholding variation
Claim your tax credits all through the year. If you have multiple properties or a heavy negative gearing shortfall, you have the option of asking your accountant to submit a tax withholding variation form. Your accountant will then adjust the amount of tax you pay, freeing up more cash flow for you. Find out more about how you can reduce your taxable income and increase your cash flow – Tell me how I can lower my tax.
Secure credit at the top of the market
Over time, windows of opportunity will arise to secure a line of credit or equity loan to grow your wealth strategy. Seeking a valuation to help you secure the most amount of equity is best requested at the peak of the market.
A good way to test the market is to order a desktop valuation. You can do this through your mortgage broker and some banks, and in most cases, it is offered free of charge.
We can reduce your stress and give you time back when it comes to actively reviewing your property investments. Get in touch for our Pinnacle Program Client Review. Call (02) 9222 9444.
Stay proactive and keep going!
Free investor tools: Sign Up to Our Switched-on Property Investors Program | Your free online property investment toolkit | Property Investment SOP – The Book | 6 Strategies for your investment property PDF