Whether you are the fortunate owner of twenty rental properties or just the one, prospects have never been better to exploit the perfect storm of opportunities now influencing the residential property market. Record low-interest rates combined with lower house prices and strong rental yields have ideally placed investors to make substantial inroads into their mortgage payments, in turn enabling them to borrow on the accrued capital.
It is timely therefore to review one’s portfolio and initiate changes where necessary to gain the most benefit from the current climate. For those with properties in the lucrative Melbourne market, the time to capitalise on one’s investment is now.
Handing over the reins
Attempting to juggle multiple rental properties can become a logistical and legal nightmare. The rules surrounding landlord obligations have become increasingly complicated for a layperson so it makes sense to ground your investments to a solid base by utilising the services of professional property management in Melbourne. Costing as little as four per cent and saving you thousands in man hours, why would you bother going it alone?
Of course, cost should only be one factor in identifying the best property management agents; after all management fees are tax deductible. There are a number of crucial elements which should be expected of an effective property management company.
As a property owner with a managing agent, you should not have to monitor incoming bank statements each month to know whether rental payments have been made. State of the art technology now exists which places financial data, including real-time payments and payment history, at your fingertips.
Property management Apps have created a valuable contribution to the three-way lease relationship. They can provide a powerful range of tools such as direct messaging, to keep you in the conversation between the tenant, managing agent and even contractors if the need arises. Aside from this, they also allow a comprehensive overview of all aspects of your investment, including:
● Inspection and condition reports
● Tracking rent in arrears
● Financial data including rental payment history
● Access to real-time sales reports and market trends
● Enabling push notifications to keep you informed of payments and communications in real time
● Keeping records of all maintenance issues including a history of quotes, costs and invoices.
Make hay while the sun shines…
With interest rates at their current record low levels, investors should be doubling up on their payments to optimise the benefits. How much can it save you? The example below demonstrates how even small extra repayments dramatically impact the loan period.
|Loan amount||Interest rate||Fortnightly repayment||Payment period|
As you can see in the above scenario, simply by increasing payments by as little as $60 per week, 10 years can be shaved off the life of a loan!
With record low interest rates providing a golden opportunity to increase mortgage repayments over the minimum requirement, investors may be in a position to dip into the built-up equity to add to their investment portfolio.
Borrowing on the equity of rental properties is a great way to build a solid investment portfolio but should be managed in a controlled manner. Always anticipate the possibility of a rate rise and ensure there is a contingency or ‘fat’ built in to accommodate higher repayments. Each new property will also come with the unavoidable taxes and rates along with the risk of periods of extended vacancy, and allowance must be made for these hidden costs.
Finally, get yourself a good tax agent who has a strong understanding of what can be rightfully claimed at tax time. Negative gearing is thankfully still in place and provides investors incentive to build their portfolios.
One thing is for certain, what goes down will eventually go back up again, so act now. Put in place a hardworking property management agent, get some good financial advice and a canny accountant, and you are well on your way to a secure and prosperous future.