How To Avoid The Most Common Property Investing Mistakes
The team at Certainty Property deal with a lot of property investors and there are a few common mistakes we see. Although our core business is property management, we like to ensure our clients are getting the highest possible value out of their investment. As such, we’ve listed three of the most common mistakes we see property investors make and our tips to avoid them.
Under utilising the tax benefits of property
Outside of super, investing in property is arguably one of the most efficient vehicles for reducing taxable income in Australia. Negative gearing allows property investors to offset the interest expense incurred on the property (more specifically, the net loss when the rental yield is lower than their interest expense) against their employment income. To reap the most benefit from this generous allowance, you need to have a level of debt against the investment property. As a general rule of thumb, property investors should pay down non tax deductible debt such as personal loans and credit cards before paying down tax deductible debt such as their investment property loan. Additionally, property investors should always seek out the services of qualified property surveyor who can devise a depreciation schedule that can be used to further maximise tax deductions.
Not proactively reassessing rents
Certainty Property offers guaranteed rent to our landlords, whereby we pay an agreed market rent regardless of if rents fall, the tenant is in arrears or the property is vacant. However, we have seen other property managers who have not reviewed a tenants rent for many years, and rather than incrementally increasing the rent by $20 or $30 per week annually, have slugged the tenant with a $100 per week increase to make up for their lack of attention. Aside from the fact that the landlord has missed out on cash flow in previous years, naturally such a large increase angers the tenant and results in an increased likelihood of vacancies. At Certainty Property, we continually review rents so that we are maximising the cash flows generated by a property and can continue to offer an aggressive agreed market rent to our landlords as part of our rental guarantee.
Managing your own property
This one may seem a little self-serving, but a large number of our clients are landlords that tried to manage their property themselves and found that it was not worth the stress and hassle. Dealing directly with tenants is a process that can be time intensive and also requires substantial knowledge of applicable laws and regulations. Sure, utilising the services of a professional property manager means forgoing a small portion of the weekly rent, there is also a huge opportunity cost in spending your time managing your property rather than considering the next phase of your investment strategy.
If you’re interested in discussing how Certainty Property and our rental guarantee can assist you, please give us a call on 1300 577 298, or send an email to email@example.com.