6
Remember you will also incur property
management fees if you are considering
having your property professionally
managed. Your accountant may also take the
opportunity to charge you more for the extra
work in preparing your tax returns. However
a
good accountant is worth their weight in
gold.
Interest rates move constantly, so you will
need to allow room in your budget for
interest rate increases and other unforeseen
additional spending. When interest rates drop,
maintaining the same repayments with the
savings going into your offset account is one
of the fastest ways of paying off more of your
loan and building a buffer if they rise again.
Think very carefully about the different loan
product offerings available and how these
relate to your spending and saving habits.
Consider options such as an offset account
that will enable you to take advantage of
using any excess cash to save on interest. It’s
also a great account to use to save for your
next investment property.
Plan ahead
- tenants come and go.
Make
sure your cash flow is sufficient to cover
the mortgage and other outgoings when
the property is empty.
Don’t think that you always have to increase
the rent either. Sometimes it is more cost
effective to have the same long term tenant
in your property than have weeks of vacancy
trying to achieve a higher rental yield.
Every property will have compromises. Don’t
miss a good opportunity because you are
waiting for the ‘perfect’ house or apartment.
If it sounds too good to be true, it probably is.
Your selection criteria should include:
•
Location:
Is it close to schools, shops, day
care and sporting facilities?
•
Transport:
Is it close to bus stops and train
stations?
•
Demographics:
Consider population
numbers, growth and density.
•
Suitability to rent:
Are the rooms big
enough? Are there usable living spaces
inside and outside and other features
such as garaging and storage?
•
Future potential:
Can the property be
renovated or developed? Are there any
plans to develop surrounding properties,
eg high density dwellings?
•
Affordability:
Stay within the second and
third quartile of prices in the suburb for
price and rent.
