Set a Framework with your Property Manager 

Set a Framework with your Property Manager 

As much as property managers want to give the best service to their clients, investors must also be responsible enough to reflect on the kind of relationship they have established with their financial team—how do they become a better client to attract the best professionals?  Being good property managers takes time and effort so having a client who is consistently proactive in pursuit of his own success makes work considerably easier and even fun.  First and foremost, investors must keep in mind that property managers are professionals—they know their way around the market because they quite literally spend every working hour studying it. It is, therefore, important for them to keep a clear set of tasks to accomplish every day in order to serve all different clients with different needs without compromising the quality of their work.  They know the market, they usually have a clear schedule. They know exactly what they need to do. They’ve got to set the task list when it comes to leasing a property, to managing a property, and how they address each of the items they’ve got to do.  The best thing for a property investor to do, is to have the same mindset. Being able to understand exactly what the investor wants saves both the property manager and their client from misunderstandings as well as wasted time and effort.  They might have an investment strategy, they might know when they plan on doing these renovations, what their targets are, exactly why they bought the property, what sort of communication they need, and what sort of schedule they want to be on.  While...
Why understanding your cash-flow is important 

Why understanding your cash-flow is important 

Cash-flow is not just about the rent that you’re earning from your portfolio.   Successful property investment requires an understanding of your individual cash-flow position needs as well as your ability to manage your cash-flow over the decades.  Sometimes people tend to start looking for properties that will represent what their understanding of cash-flow is – which is often wrong to start off with.  If you take someone who is on a really good income, a 5 per cent yielding property might be good enough for them once they include all of their tax deductions.  However, if you consider a young couple who are just starting out and don’t earn a lot, and therefore do not have a lot of disposable income, a 5 per cent yield may not be enough to maintain their lifestyle.    It’s an individual equation  Your own unique situation or financial footprint is going to dictate where you should begin and where you’re going with your cash-flow requirements.  As life unfolds there are going to be times when your cash-flow is going to be more important to you, which is why pre-planning is vital.  Managing your cash-flow throughout your life – including when children arrive, as an example – is the name of the game, especially when you’re building up an asset base.  Take our interest rate at the moment, which is historically low but won’t stay that way.  Too many property owners and investors aren’t thinking about that overly much, which will ultimately impact their cash-flow, because they’re too busy enjoying the strong capital growth. This is a critical mistake.    Cash–flow management  When it...
How to increase your rental yield

How to increase your rental yield

Market places change. These tactics can help investors increase their rental yield, regardless of price and market conditions.    Cosmetic renovations  Humans can be superficial. So even a basic cosmetic facelift to your investment property may be enough to command extra dollars in rent each week.  This could be a fresh coat of paint, more modern light fixtures, or updated blinds and curtains to maximise light. The rule is to keep it simple, not blow the budget, and ensure all changes you make are mostly timeless.    More substantial renovations  No amount of fresh paint will help if the kitchen and bathrooms look like something out of the dark ages.   Substantial renovations, like a new kitchen and bathroom, or new flooring, require capital and time, and of course a loss of rent, but can dramatically increase your yield. Apart from the immediate increase in rent, it will also reduce how much you will spend on repairs and maintenance in the long term, as you will have new appliances and fixtures.  Assess similar local properties to understand what the local standards are to avoid overcapitalising and to assist with budgeting.    Add furnishings  Furnishing a property can instantly lift its rent, so long as this is appropriate for your location.  As an example, furnished properties may be ideal near universities where there is high demand for “turnkey solutions” by students. In this case, styling should reflect a younger demographic, and cater for potential wear and tear from socialising.  Travelling business people may also require furnished properties near airports or city centres, and may prefer not to spend through the nose on more expensive...
Tenant problems to be aware of

Tenant problems to be aware of

When you first purchase an investment property, it’s easy to think of rent as a passive income stream that simply takes care of itself. But tenants can cause you problems….  Most tenants comply with their obligations, and are respectful of their landlord’s property.  If you’re planning to be a landlord long term, however, there are a couple of tenant problems you’re almost certain to face. Fortunately, landlord insurance could offer a mix of options that may be able to cover you against some or all these risks, so if the day comes you won’t be left empty handed!  Tenants leave without telling you  Contractually, every tenant is required to give notice before they end their lease at a property.  Sometimes, however tenants leave with short – or no – notice for a variety of reasons.   When tenants leave in a hurry, it’s sometimes difficult to retrieve the rent you can lose while preparing the property for occupation and finding new tenants.   Landlord insurance policies may cover you for up to six weeks while you search for a replacement tenant, and could help to reduce your out of pocket losses.  Tenants stop paying their rent  This is the big one. Failure by tenants to pay their rent is more common than you think. In fact, claims for rent make up more than 40% of all applications to Australian tenancy tribunals.   Sometimes by the time you’re able to replace your non-paying tenants with new tenants, you may have lost more rent than is covered by the bond.   Landlord rent default insurance is generally available as an optional cover that can protect you from loss of rent for a period...
10 Property Investing Mistakes 

10 Property Investing Mistakes 

Whether you’re new to property investment, or you need a quick refresher course, here are some mistakes all property investors need to avoid for a successful investment career.   1. Falling in love with the property  You need to stop thinking like a home owner and start thinking like a business owner. You need to like the property. A question you should ask is could you live in it yourself? If you can, then it’s likely someone else can and so the property is probably rentable.  2. Not checking the facts  Due diligence is more than just an inspection of the property, it’s also a thorough investigation of your area’s rental market — vacancy rates, average rents, average age of the rental stock, zoning, government regulations.  3. The home improvement rule  It will always take three times the money and twice as long as you first estimate to get a property ready to rent. Allow for additional funds to pay the mortgage whilst the property is vacant, obtain a building inspection by a qualified building inspector.  4. Cash reserves  A lack of cash reserves puts unnecessary pressure on you to do substandard repairs, accept substandard tenants or make other poor decisions because of a fear of vacancy. When you have a sufficient cash reserve, you act rationally.  5. Doing it yourself  New investors often attempt to manage it themselves. That approach can end up costing more in the long run. Find an accountant you can talk to, a lender who will work with you and a reputable real estate agent to find a property in your price bracket. Find a...
Tips for starting your property portfolio 

Tips for starting your property portfolio 

Starting your own property portfolio may seem daunting, although with a few sage tips you can avoid unnecessary pitfalls and ensure success!  Be clear on your goals  Be clear on what you are trying to achieve from property investing. Be specific about the financial outcomes you looking to achieve from property investing, and in what time frame you want to achieve this in. Property is just a vehicle to get you to the financial position to give you the lifestyle you desire – ask yourself, “is it passive income, or a net equity position, or is it a combination, and when do you want to achieve this by?”  Be educated  We’re playing with large sums of money, and most often buying a property will be the biggest financial decision you will make in your lifetime. It still baffles me that some people spend more time researching a weekend getaway than they do buying a property. There are some great online platforms including Smart Property Investment, Australian-specific property investing books, podcasts, online forums, networking events, and free seminars.  It’s in the strategy  It’s important to understand what financial outcomes you are trying to achieve from investing in property because this will dictate the strategy you adopt, and how passive or active you need to be. It’s also important to assess your risk appetite dependent upon your situation. Some well-known strategies are buy and hold, renovation, flipping, development, and joint-venture to name a few. It might be a combination of these, however always be clear on what outcomes you are trying to achieve.  Build your team  Once you’ve created what you believe is...
Renovation projects that add instant value 

Renovation projects that add instant value 

Looking to add value to your investment before selling but not sure where to get the most bang for your buck? Before putting your property on the market or undertaking any renovation projects here are some suggestions that add instant value.   Paint  Never underestimate the difference a fresh coat of paint can make! This is one of the most cost-effective ways to not only add value to your property, but to make it look new and modern. Go for neutral, cool toned colours to make spaces appear larger. Choosing colours that are not likely to date quickly means you’ll get more life out of your investment.   Kitchen upgrade  The value a brand new kitchen will add to your property is incomparable. The kitchen is the make or break point for many potential buyers, so if you’re looking to sell for a high price point, ensure the kitchen is up to scratch. Don’t spend more than you have to on unnecessary features. You can’t go wrong with adding extra storage, quality finishes and appliances, as well as a fresh, modern style.   Bathroom upgrade  The other major make or break point for many buyers is the bathroom. If your bathroom is old and outdated, it’s definitely time to consider an upgrade. Again, go for clean, modern tiles that aren’t likely to date any time soon. If your space is small, larger tiles can help it look bigger and more expensive than it really is.   Front façade  The first thing potential buyers are going to see is the front of your property. Making a strong first impression is essential....
Who you need when investing

Who you need when investing

Purchasing a property can often be a daunting and painstaking experience, particularly if it’s someone’s first investment property. Here is a guide to five key personnel that experienced investors often work with.  Mortgage broker  Brokers liaise with both borrowers and lenders, researching products on the market and assisting clientele with the application and loan settlement process. As many banks tighten lending standards based on risk assessment, investors often work with brokers to secure property funding through alternative lenders.  Buyer’s agent  A buyer’s agent works on a client’s behalf to search, evaluate and negotiate the purchase of a property. Many interstate or time-poor investors employ an agent to do the groundwork in finding a property and often have access to resources otherwise unattainable for investors.  Accountant  An investment accountant maintains a client’s investments while providing financial advice and monitoring their finances. Many investors work with accountants to determine what they can afford to purchase and how quickly they can expand their portfolio.  Solicitor  A solicitor in this space is a representative of, or negotiator for, clients regarding contractual agreements and transactions. Investors often work with solicitors for property settlement, ensuring the accuracy of contracts as well as ensuring relevant documentation has been received.  Real estate agent  Real estate agents are instrumental to investors looking to rent out their properties and will advertise the property, schedule viewings, liaise with potential tenants and arrange paperwork in preparation for rental agreements within a short time...
How to pay your mortgage off sooner 

How to pay your mortgage off sooner 

Paying off a mortgage as quickly as possible reaps many benefits. By leveraging some simple savings strategies you can reduce the term of the loan and the interest you’ll pay. Reduce overspending We all do it. Unplanned purchases and impulse buying can seriously affect your financial health. Just by simply preparing a budget shows how much can be saved with a little planning. Pay lump sums off your mortgage Instead of pocketing your tax return or work bonus, consider putting it directly against your mortgage. Every dollar over the repayment amount bites into your principal, which reduces the interest payable. Don’t be complacent about direct debits and insurances Every year, do a health check of your insurances, including car, home and health, and promptly cancel subscriptions, like a long forgotten gym membership. Don’t forget to check your current loan/mortgage rate. Banks are very competitive these days. Sell it rather than dump it With online selling now the norm, there’s no excuse for throwing out an old couch or TV. Take some photos, put it up for sale on online garage sale sites like Gumtree or eBay, and make a little bit of extra cash to throw onto your loan. Stamp out your debt Debt kills your financial momentum. While you may be paying 5 per cent interest on your home loan, you could be forking out up to 20 per cent on your credit card or car loan. Forget extra repayments on your low-interest mortgage until you’ve stamped out your high-interest...
How to buy property right 

How to buy property right 

Buying property has definitely got its upsides and its downsides. The skill lies in navigating these in your favour in order to make your property investing most profitable.  The most common words of wisdom heard from those that do well with their investments are; buy with your head, not your heart; and the profit is in the purchase.  This is where most investors and especially those new to property investing, go wrong. Most tend to treat buying an investment property just like buying their home, which translates to an emotional buy. This is where most go about it the wrong way too.  Commonly, we tend to look at agents’ windows, websites and the big property portals for suitable properties to find an investment. Yet, there are other ways to go about it if you want to buy with the added value of either having fast capital gain, scope for improvement, sub-division or even development potential.  Ultimately, when we want to buy any other product at the best price, we look at ways to buy from those that need to sell, how we can get it at a reduced price; buy it at wholesale or direct from the producer. Come to property, most investors look only at the retail end, which in most cases means that they are paying a premium price to begin with.  ‘The biggest profit is made at the point of purchase’, I have been told too many times from successful investors to ignore.  Just like a personal trainer at the gym, or a life coach for your career development, a property investment mentor are available to help you...
Learn from the Experts

Learn from the Experts

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