MODERN INVESTING
collecting the rent, and ensuring the
place is kept in good order. For this
they charge a fee based on the rent
amount, usually 5-8% of the rent.
They will also charge for advertising
and often other charges when a
lease expires and new tenants
are required. For these reasons
several of my clients choose to do
this themselves and therefore earn
a higher effective return on their
property.
Even if you employ a property
manager you should not assume
it is an appoint-and-forget
arrangement. Of course some
managers will be better than
others and unfortunately there are
many who are lazy. A common
example I see is that they do not
do enough research of what rent
your property could be achieving
in the current market. They tend to
focus on just having it occupied.
I strongly recommend doing your
own research of the area 1-2 times
a year and especially when a lease
is coming up for review.
I had a client who after doing her
own research, had the property
manager increase the rent by $55 a
week after they recommended the
lease just be rolled over with the
same tenants at the same amount.
It turned out the existing tenants
stayed on as they recognised what
the market value in the area was.
The Financials
Many people just assume a
mortgage is a 30 year term and that
it’s a matter of paying it off over
that time. The fact is mortgages
can easily be renegotiated and
refinanced with the same lender
or moved to a new one. Market
conditions, product features, and
competition change so much. In
addition to this your own financial
situation does as well. You should
review your mortgage every six
months, or better still if you have
a mortgage broker make sure they
are doing it for you. So many things
can affect the rate you are paying
and these have large impacts on
the financial performance of your
property. Recently I was able to
save a client 1.3% on a $525,000
mortgage just by getting the
Tim Boyle from Finalytics Financial is a
chartered accountant, mortgage credit
adviser and active property investor.
He has over 20 years’ experience in
finance, accounting and consulting, and
specialises in property finance. Visit www.
finfin.com.au or email tim.boyle@finfin.
com.au
property revalued and negotiating
with another lender. This saved her
over $6,500 a year on her mortgage
repayments!
Another simple tip is to get your
ATO classification changed to
include a property investor. This
allows you to effectively deduct
your negative gearing and other
expenses during the year rather
than claim a refund when you file
your tax return at the end of the
year. It is simple to do and can
really help with month to month
cash flow. Speak to your accountant
about this.
If you’re willing to have a more
active role in managing your
property investment, there is a
lot that can be done to give your
returns a great boost. The more
proactive you decide to be the
better off your returns will be in the
long run.
January 2016
ModernBusiness
37