18 Sep 2020| Posted by: Colin Segal

Property Investment 101: How to Get the Best Returns.

There is a reason that the majority of Australians that own an investment property never go on to buying another. The first one simply doesn’t perform well enough.
Investors feel stuck, frustrated and simply can’t afford to go ahead with another investment, particularly if they feel like it’s going to end up like their first experience.

Having a strategic approach to owning is the key to success when investing in property. Part of this strategy is to ensure that you maximise your returns every step of the way.
In this guide we will share with you the Top 4 steps you can take to maximise your returns and how to achieve them.

Step 1: How to Minimise Vacancy.

Every day your property sits vacant it’s costing you money.

Ideally, you could advertise your property and find a tenant at the click of your fingers, however that is usually not the case.

Presentation is the key to attracting a high quality tenant quickly. It’s important that the property looks great and is in a good state of repair if you are going to land the best possible tenant at the best price.

How to achieve this.
Start by investing in professional photos. These are essential in the current rental market to present the property in its best light. Tenants are spending more time researching online these days, so having great photos, floor plans and videos are going to make your property more attractive.

Plan ahead.

Ensure you advertise your property for lease AT LEAST 2-3 weeks ahead of when the tenant is due to move out. Discuss the marketing strategy with the managing agent. A good agency will be pushing your property to their existing database and getting fresh leads from advertising. Make sure your property is up on the major websites (realestate.com.au + Domain) and has a clearly visible sign at the property as a minimum.

If the property is vacant (if you bought it new for example). Rather than spending a lot of money on staging the property, some specialist photographers will be able to photoshop furniture into the photos to make it look more inviting.

Step 2: How to Minimise Risk

Investment properties can end up costing money when they are not professionally managed.

When a property is handed over to a new tenant, it’s vital that the property manager conducts a thorough ingoing condition report including detailed photos. This is the key document that will be relied upon to ensure that the property is returned in great condition and is used as evidence to show if any damages were caused by the tenant (excluding fair wear and tear). If damages have occurred, it is the tenants responsibility to repair them.

Regular inspections of the property must also be conducted to nip any issues in the bud. It happens all too often that inspections are skipped by dodgy agents and rental properties are found in a state of absolute squalor. Be vigilant and note when inspections are due on your property, follow up with the agent and don’t be afraid to ask what’s happening with your property.

Minimising risk also means taking action as a landlord and dealing with repairs and maintenance issues quickly. Failing to make simple repairs to the home can cost you a good long term tenant, or even worse, result in injury or illness. For example, a leaking pipe could result in mould issues which could cause health problems for your tenant.

Having funds set aside for maintenance and regular communication between you as a landlord with your property manager can reduce this risk almost to zero. In turn the property manager will need to have a good line of communication with the tenant so that any issues not picked up at inspection time are dealt with.

The last step to reducing risk is to have the right insurances in place. Landlord insurance in particular is vital to completely protect yourself.

Step 3: How to Maximise Rental Income

In an ideal world, the rental return on your investment property will continue to increase year on year. However, this isn’t usually the case, with rents often fluctuating to reflect current market conditions.

It’s important to continually evaluate the current rental value against what is possible in the marketplace. Weigh that up against the tenancy in place to see when it’s the right time to increase the rent. If a rent increase is warranted and you want your tenant to stay, make sure it’s reasonable. Most people won’t bother moving for $15-$20 a week. You’ll also need to issue your increases in line with legislation and outside of a fixed term period.

A good agent will review the rent a couple of months ahead of the lease expiry to ensure that an increase can come into effect as soon as possible. They will also give advice on whether it may be better to offer a renewal fixed term period with or without an increase to reduce the chance of vacancy.

Step 4: How to Maximise Your Tax Return with Depreciation

Depreciation is the hidden gem of property investment. Depreciation is a tax deduction property investors can claim to account for the ageing and wearing out of their investment property as an asset. It is generally the second biggest tax-deduction made after interest.
How to claim.

Start by organising a depreciation schedule through a quantity surveyor like BMT. This is their website: www.bmtqs.com.au/
The cost of the depreciation schedule is also tax deductible and your accountant will then use the report to assist you to increase your weekly cash flow by reducing your taxable income, putting more money back in your pocket.

To maximise depreciation it is important to keep track of all receipts from renovations and additions like granny flats or extensions. A newly built home offers the highest amount of depreciation so if you are looking at buying an investment property, try and get something brand new.

If you want to maximise your property portfolio, getting help from the right people is the first step. Whether you’re at the beginning of your journey or have a few properties under your belt, we can help you get to the next level.

Invest the time into yourself and your property portfolio by booking a free discovery session with us where we can help create a plan to achieve your property goals, whatever they may be.

Click the link below to book now.

https://www.assetadvantage.com.au/contact-us