How To Invest Without Losing Your Sanity

How To Invest Without Losing Your Sanity
An Editorial By Phil Anderson · Wednesday August 24th

 

The main goal for most property investors is the success of the investment itself. That’s a no brainer. And to achieve this, an investment property should ideally deliver long-term capital gains without hurting your weekly cashflows. But perhaps the most overlooked aspect of property investing is not just maintaining your bank balance, but also your sanity! What cost are landlords paying (both figuratively and literally) in the long run by cutting corners just to save a couple of dollars? This week we explore the notion of using a professional Property Manager, and how enlisting other people’s time can be your real leverage when property investing.

One of the hot topics in the media this year has been negative gearing, and whilst we won’t go into the finer details today, the point is that Australian property taxation laws allow you, from a financial stand point, to treat an investment property as a business.

What this means is many of your ongoing costs are tax deductible, so maximising your tax deductions can be the deciding factor of whether your property is actually feeding your bank balance, or starving it.

And just like a business, hiring professionals to assist with related services is not just good business, but a cost effective, tax deductible one.

If you use a property management company to rent the property and manage the tenants, you will pay a small fee that is tax deductible. Think of this as hiring an employee to manage some of the every day tasks of your business so you can focus on larger, more important aspects… such as business growth, business performance, or perhaps just having more time to yourself to enjoy life!

Despite these very obvious reasons to enlist a property manager, new research has shown a larger than anticipated percentage of landlords are choosing to opt out of property management services altogether, roughly 16%.

However, this same survey conducted by realestate.com.au discovered that an overwhelming amount of property investors (84 per cent) still choose to engage a leasing agent or property manager to assist with their investment properties.

The reason most land lords opt to use a property manager, according to Stone Real Estate’s Head of Property Management Sam Macri, is for “peace of mind & security”.

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“Knowing that a team of professionals are working to ensure your investment is looked after, from urgent repairs being dealt with quickly by trusted tradesmen, to attending tribunal hearings on their behalf should the worst occur, is why we are here”.

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Many first time investors think that managing the property themselves to save literally just a few dollars every week sounds easy and worthwhile. But having to arrange an electrician at midnight when the power is out, or have to find a new, high quality tenant on short notice can quickly change their mind.

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“Thanks to our online booking system, Stone Real Estate has a database of potential tenants that spans Sydney, helping landlords find their ideal tenant, and renters their perfect home”, says Sam. "This means our landlords properties are rented faster, to better qualified tenants.”

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Also uncovered through a study of landlords was that a sizeable chunk of them invest in property before owning their own home, roughly one in three in fact. Many of these may be even living at home still, or preferring to rent rather than pay an inflated price for their desired living location.

Local and National property markets are ever changing, and if we are indeed trying to achieve our goal of making our properties a success, then we must stay informed and change with it.

SPOTLIGHT
Hervey Bay

Emerging Hotspot
Cashflow positive
house & land packages

 

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