One of the appealing aspects of property investment is that it requires relatively little time, once you’ve made an initial purchase – particularly if you use the services of a professional property manager.
However, there are some things a property manager can’t do for you which could pay off handsomely over time.
Here are a few New Year’s resolutions to consider:
I will check that my interest rate is competitive
Both fixed and variable interest rates are currently low, and, in many cases, a phone call to your bank’s customer retention team can yield a further drop – particularly if you can point to competitors who are prepared to charge you less. Rates of less than 5% are easily achievable.
I will order a depreciation report – and keep it up to date
Many property investors aren’t aware of the benefits of depreciation, which can be claimed against your taxable income each year and improve your cash flow. To claim, you’ll need a once-off “depreciation schedule” which can be prepared by a quantity surveyor and used year after year.
Once you’ve got the schedule, it is worth keeping it up to date by advising your accountant about any new equipment purchases such as a replacement hot water service or a new air conditioner.
I will keep track of what my property portfolio is worth
Long-term investors, in particular, can sometimes be pleasantly surprised by what their investments are worth. An accurate understanding can help you work out when you have enough equity to consider further investment – either in more property or other assets.
I will read my insurance policies, and check my sums insured
Landlord and building insurance policies are not created equal but many investors fail to read their policy until they need to make a claim. For example, some policies exclude cover for accidental damage, arson by a tenant, clandestine drug laboratory clean-up or properties leased month-to-month. Under-insurance is also a common problem, so make sure your sums insured are accurate and include sufficient allowance for demolition and rebuilding.
I will compare the rent I’m charging against the market
By researching the rents for comparable homes in the area, you can determine whether you’re charging an appropriate amount or whether a rise might be warranted. It will also help you decide if extra features, such as air conditioning, are worth adding.
Your property manager can help advise you in this area.
I will examine the performance of my investments and, if necessary, cut my losses
It is very difficult to admit you’ve made a mistake and sell, particularly if that means incurring a loss. However, hanging on to a poorly-performing investment can hamper your ability to make better investments elsewhere. The aim of the game in property investment is to make money. If you’re not making money (whether through capital gain or rental returns) and nothing looks set to change, then what’s the point?
I will redirect all property bills to my property manager
The vast majority of property managers will pay bills such as rates, land tax and water on your behalf from rent without charging you extra. They will then send you a neat and tidy summary at the end of the financial year which you or your accountant can use to easily do your tax. It takes a little effort to get bills redirected to your property manager in the first place, but it pays off.
I will keep learning
There are some excellent free and inexpensive resources around which you can use to further your property investment knowledge. Blogs, e-newsletters, investment forums, magazines and electronic publications such as this are useful sources of information.
I will build my network
A team of knowledgeable contacts can prove invaluable. Think builders, trades people, property managers, mortgage brokers, town planners, fellow investors, real estate agents… By fostering positive relationships, you can call on them for advice down the track.
I will do my homework. There are unfortunately some sharks in the property investment waters. It can pay to keep alert and question the motivations of anyone who seeks to advise you. Always double check their assertions with your own independent research before making any decisions.
Sharon Fox Slater is the Executive General Manager of landlord insurance provider RentCover, a division of EBM Insurance Brokers.
This story originally appeared on Property Observer.