There are many elements to remember when you're a property investor.
From interest rate changes to the ups and downs of property prices, you must remember a few essential points to maximise the value you get from your investment properties.
In this article, we share a few of the common confusions you should avoid when it comes to property investment.
There are some models of debt you should pay off as quickly as possible, such as credit card debt. Other types of debt may provide you with a tax deduction, such as loans taken out to repair or improve your investment property. It's wise to pay down any debt that won't contribute to a higher tax return quickly. You can then start paying off tax-deductible debt when you can. Make sure you speak to a financial adviser so they can assess your individual situation and help you decide the best order to pay down your debt.
A common area where property investors fall short at tax time is maximising their depreciation deductions. When done accurately, depreciation claims can add thousands to your tax return. If you don't have one already, make sure you get a depreciation schedule drawn up for your property to maximise your deductions.
Many property investors fall into the trap of not increasing the rental price when renewing a tenant’s lease. If you do this, you can end up in a situation where you need to increase your rent by at least $50 to catch up on past idle rent prices. When your leases come due for renewal, consider increasing the rent by $5 or $10. These small increases are more palatable tenants, and your rent will grow in line with market growth.
Just a week of vacancy can defeat any of the gains you might have seen through a lofty increase in your rental prices. Be smart about the prices you set for your rental properties and talk to your property manager for their recommendation. You'd rather have a quality tenant locked in promptly at a decent rent per week rather than having your property sit vacantly and losing money over $10-$15 per week.
It can be tempting to think you can manage your investment property yourself. However, there are hundreds of little tasks and processes that go into efficiently managing a rental property. Leave the management of your property with us as your property professional so you can focus on your investment strategy.
With so much to think about as an investor, it can be difficult to see where you may be making some common investing mistakes.
Being mindful of the maneuvers above can help you become a better investor and make sure you're always prepared to capitalise on new market opportunities.
Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.