Real Estate Investor Magazine South Africa March 2013 | Page 26

SMART MOVES

BY DR MARNUS WESTSTRATE

As My Properties
Live And Breathe
Long term projections

M

y proper t y por t fol io is a l ive,
constantly changing and growing
month by month. True, it is a
slow growth, but there is constant movement
nonetheless. This slow movement is one of
the things that makes property investing so
appealing. You can buy a few properties, have
letting agents manage them, and then sit back
while your cash f low grows to break-even,
earning a steady income through capital growth
in the mean time. But, every so often it becomes
necessary to delve into the details.
In last month’s article on property software
I wrote about projecting future performance
and how the right software can help with
comparisons when buying a new property.
I now raise another question: What about
managing your existing portfolio? Among other
things effective portfolio management has two
requirements: being notif ied of important
events or when problems occur so action can
be taken, and keeping track of changes to your
portfolio as they occur.
Take maintenance for example, planned or
unplanned – while not time consuming when
managed by an agent – it does boil down to a
negative effect on your cash f low. Vacancies
can also be sudden killers of income, and that
aside, interest rate changes are certainly the
number one contributing factor in sudden
cash f low changes affecting your return on
investment. Keeping track of these events can
be cumbersome, and so can tracking property
valuations or even remembering to value your
properties from time to time which is essential
for knowing when to refinance. I believe good
24

March 2013 SA Real Estate Investor

Property Software not only helps you do
good projections, but adds even more value
by explicitly tracking the performance of your
portfolio over time and assisting with the
management thereof.
If I come back to a projection I did for a
property six months or a year later much would
have changed: there should have been some
capital growth, a rental increase and perhaps
interest rate changes. Effectively “Year 0” has
moved forward, and so the values must be
updated while incorporating the last year’s
performance in the new projection. If the initial
values are now lost I’m not really gaining, but
keeping track of them as past performance
will have considerable benef it for making
assumptions about the future.
Detailed tracking is important when it’s
needed. Interest rate changes or unexpected
maintenance such as a burst geyser is seldom
considerate in the sense of conveniently
occurring at the start of a f inancial year.
Tracking them requires a fine grained monthly
view of your portfolio, while the relatively slow
growth of a property portfolio necessitates a
long-term yearly history and projection of your
investments. Good property software should
provide you with both, and make switching
between such monthly and yearly views simple
and intuitive.
W hen it comes to reminders I see t wo
significant needs: firstly, being reminded of
expiring leases so you can organise a timely
renewal. Experience has taught that not all
letting agencies are as on top of this as they
should be; yet, when necessary, replacing a

tenant in time is essential for avoiding costly
vacancies. The second is receiving notifications
when you haven’t received your rent on time or
are forgetting an outgoing payment that’s due.
Getting email reminders for these routine tasks
is a simple feature with far-reaching benefits.
Track ing the past gives a much better
ind icat ion of t he f ut u re, a nd ac t ively
managing your portfolio can help keep
that future rosy. With the right property
software you can know where you stand,
maintain peace of mind, and enjoy the sense
of achievement that goes with it.

PROPERTY SOFTWARE
Property Software can assist in
effective portfolio management by:

1

Tracking changes such as new
valuations, rental increases and
interest rate changes as they
occur.

2

Keeping track of past performance
which should be the basis for
future decision making.

3

Sending you reminders to check
rent received and outgoing
payments that needs to made.

4

Notifying you of expiring leases so
you can organize a timely renewal.
RESOURCES
88 Pockets
www.reimag.co.za