Avoid these common mistakes and maximise your investment
There’s lots of things to remember when you’re a Property Investor. From interest rate changes to the ups and downs of property prices, it’s important you remember a few key things to maximise the value you get from your investment properties.
Not prioritising your debt
There are some types of debt you should pay off as quickly as possible, such as credit card debt. Other types of debt may provide you with a tax deduction, such as loans taken out to repair or improve your investment property. It’s wise to pay down any debt that won’t contribute to a larger tax return quickly. You can then start paying off tax-deductible debt when you can. Make sure you speak to a financial adviser so they can assess your unique situation and help you decide the best order to pay down your debt.
Leaving your property vacant due to high rent
Just a week of vacancy can undo any of the gains you might have seen through a lofty increase in your rental prices. Be smart about the prices you set for your rental properties and talk to your property manager for their recommendation. You’d rather have a tenant locked in quickly rather than having your property sit vacant and losing money.
Forgetting to claim depreciation
A common area where property investors fall short at tax time is maximising their depreciation deductions. When done properly, maximising your depreciation claims can add thousands to your tax return. If you don’t have one already, make sure you get a depreciation schedule drawn up for your property to maximise your deductions.
Not increasing rents
Many property investors fall into the trap of not increasing the rental price when renewing a tenant’s lease. If you do this, you can end up in a situation where you need to increase your rent by at least $50 to catch up on past stagnant rent prices. When your leases come due for renewal, consider increasing the rent by $10 or $20. These small increases are more palatable to tenants, and your rent will grow in line with market growth.
With so much to think about as a property investor, it can be difficult to see where you may be making some common mistakes. Being mindful of pitfalls, can help you become a better investor and make sure you’re always prepared to capitalise on new market opportunities.
If you have any questions, or need clarification on any of the above, please contact Anna Marten, our Head of Property Management, on 9651 1666 or anna@guardianrealty.com.au.
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