4 ways to maximise the value of your property investment portfolio

With property investment such a popular wealth creation strategy, your investment must work in your favour. As one of the most significant financial decisions you’ll probably ever make, do yourself a huge favour by getting to know and understand some of the most popular property investment strategies Australian investors use to leverage their return on investment. When managed effectively, investing in property can certainly be financially rewarding. Your strategy will come down to your financial goals and life plans, determining whether you are comfortable dabbling with just one investment property or whether building a property portfolio will be more beneficial. Market trends, interest rates, rental yields and ongoing maintenance costs will all affect how you build your portfolio and manage your finances.

Western Sydney Investment

1. Managing your cash flow
Look into a positive cash flow property investment strategy to enhance your daily cash flow. This is where the income from the property is more than the related expenses, including your mortgage repayments. The advantages of this strategy are that it’ll create immediate monthly cash flow, which will make you more appealing for further bank lending, and you’ll have extra cash to make up for any losses on other properties.

The income from investments with this strategy is taxable, though, and there’s no guarantee of permanent positive cash flow. Local community shifts or market changes can also positively or negatively affect your investment. Speak with your financial advisor for the best advice to suit your situation.

Positive cash flow can create an excellent buffer for a maintenance kitty. Wear and tear is inevitable, and some things need repair or replacement more urgently than others. Having available funds will save you the stress of trying to find the money when you need it, and the property will be more appealing to potential renters or buyers in the future.


2. Renovate to sell
Otherwise known as ‘flipping’, buying a run-down property in a sought-after neighbourhood, renovating it yourself or with qualified tradespeople, and then getting it back up for sale is a smart way to create wealth quickly. Don’t be fooled by how easy it sounds, though. To make a decent profit, you must understand how much renovation will cost and its sale potential, such as time on the market and value. Be wary of hidden issues, especially in older homes that may need more TLC than you’d predicted initially. Only spend time and money on updates and renovations that will give you a more significant profit. Time is money, so the quicker the ‘flip’, the better for your hip pocket.


3. Buy and hold
A popular alternative to ‘flipping is to buy and hold. This is a relatively passive way to accrue wealth, where you purchase an investment property with a mortgage and rent it out for longer. As market trends and values increase, so will your rental income and the equity in your property. You can then decide to use the equity in that property to purchase another or cash in and sell when the time is right. This property investment strategy usually leads to long-term capital growth, but as with any investment, do your research into future infrastructure planning and potential property appreciation in the local area.


4. Block-splitting
Block-splitting is where a block of land you own or are buying is subdivided into two or more smaller parcels. These are then sold to developers, or you can build and then rent out or sell the completed properties yourself. One drawback is that the land needs to be a decent size, as the size will determine the developer it will attract or the type of investment property you build.

Our advice? Listen to the experts. 

Whether you’re looking to start or increase your property portfolio or create wealth in anticipation of your retirement, connect with a reliable financial advisor to discuss the best strategies to build your portfolio to suit your goals. Check-in annually with your advisor for the best results.

Talk to your accountant to uncover other ways to maximise your investment. A tax depreciation schedule is a good place to start, as it will identify depreciable items that can be claimed at tax time. Remember, when you’re renovating, there could be scrapping items that can be claimed. 

Invest wisely and engage with a qualified property manager who’ll look after your investment as if it’s their own. They’ll take the stress away by screening and placing tenants, marketing and managing changeover of tenancies, monitoring ongoing repairs and maintenance, and ensuring rent is collected and bills paid. They’ll also conduct thorough routine inspections and provide updates on required maintenance, potential rent increases, market trends and conditions and any capital works that you may need to plan for to remain competitive in the local rental market. 

Find out how we can help you maximise the value of your property investment. Contact us today.

Looking for an accountant or financial planner? We Recommend Apex Group - Accounting and Wealth Services you can find their details here

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