7 ways to maximise your returns as a property investor
In many cases, we buy homes largely with our heart. But we should buy investment properties entirely with our head, because the aim is usually to generate the largest possible financial return.
With that in mind, here are seven ways to maximise your investment returns.
1. Select the right location
There’s a rule of thumb that location dictates 80% of a property’s long-term price and rental performance. So it can be smart to base your choice of location on hard data rather than gut feel. You can either do this research yourself or outsource the process to a buyer’s agent.
2. Choose the right property
It’s important you avoid properties with red flags, such as structural problems or pest infestations, otherwise you’ll have to spend a lot of money on remediation in the years ahead. You can reduce this risk by hiring building and pest inspectors. Also think carefully about homes with limited appeal, such as those on noisy roads or far removed from amenities, as their price and rental growth could be limited.
3. Find a good property manager
A good property manager could make you, rather than cost you, money, by helping you fill your property faster, for longer and with better-quality tenants. Also, they could also help you set just the right rent – not so high that you scare off tenants and not so low that you leave money on the table.
4. Maintain your property
Conducting regular maintenance can help you maximise your returns in two ways. First, it could help you attract and retain tenants. Second, it could prevent small problems, which are relatively cheap to solve, from turning into bigger problems, which can be very expensive.
5. Do strategic renovations
Renovating your home can be a fast way to increase its value and rent. But you need to be careful not to overcapitalise and not to invest in modifications that are of little appeal to potential buyers and renters. Also, renovating is not suitable for everyone, because it usually requires a significant upfront investment.
6. Collect all your tax benefits
Depending on your scenario, you may be able to reduce your taxable income through negative gearing and claiming depreciation. To do that, it’s a good idea to keep thorough records of all your expenses, invest in a tax depreciation schedule from a quantity surveyor and hire a good accountant.
7. Refinance your loan
It’s a good idea to at least compare your home loan to others each year. That’s because even though you probably got a great loan at the time, the mortgage market is always changing. This means you might now be able to switch to a comparable loan with a lower interest rate or one that is better suited to your needs
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How long has it been since you took out your home loan? If it has been a while, contact us today so we can let you know how much money you might be able to save by refinancing.
Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.
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