How Perth property investors can save thousands in 2020.

How Perth property investors can save thousands in 2020.

The number 1 identifiable issue that drastically affects the returns and benefits for property investors in Perth is a simple one, complacency. Investors become content with the status quo over many years and ignore the sheer and undeniable benefits an investment property can bring when structured and set correctly.

There are 3 main components that provide for the perfect investment property, most investors perhaps do 1 or 2 of them well but very few truly grasp the intangible benefits of getting all 3 nailed. The components are very simple – maximise the rent yield, minimise the costs and expenses of ownership and maximise your tax offset position. It is a simple formula, it takes some effort initially to set them all up, however, once completed, it is only tweaking needed for years to come to maintain the maximum efficiencies.

Maximise Rental Income

Rents are generally market driven, when there is an undersupply of homes rents generally increase, an oversupply conversely can lead to rent reductions. The one thing you can control is having an Agency that has a pro-active approach, seriously good marketing and leasing processes and the acute awareness of how important maximising income is to their investors. We know that even $10 per week more leads to $520 per year in extra income, every dollar adds up and makes a serious difference to the efficiencies of an investment property. We see ourselves as having the ability to be the Industry Leaders in rental income benchmarks, we can make a collective difference to our investors income, that is what we strive for everyday.

Minimise Costs and Outgoings

Understanding that maximising your income is great, however, if you are simply paying too much to hold and maintain the property, the higher income is eroded. So what are some of the costs of ownership? Well, there are costs that you have no control over such as Council Rates, Water Rates, Land Tax etc which are set down by the relevant authorities, so, unfortunately, these are nonnegotiable costs that can’t be minimised. All other costs can be optimised to ensure that your outgoings are as efficient as possible.

One of the major costs of investment ownership is you loan. 80% of investors have an investment loan attached to their investment property. The interest component of this loan is in theory dead money. Our goal is to reduce the interest component as best as possible taking into consideration your investment strategy. If our Finance Team can save you $100 per month in interest, you can potentially pay down the investment loan faster saving you tens of thousands of dollars in the long term. Our Finance Team, in some instances, have saved our investors up to $500 per month as the investor simply was not diligent around re-visiting the ever-changing products available in the market and was paying a fortune in interest and fees.

Repairs & Maintenance is another core cost of ownership that can cost thousands of dollars per year. Investment properties benefit from having money spent on them and every home needs repairs and maintenance to keep it in good functioning order, however, whom you get to carry out repairs and maintenance can make a significant difference to the costs of such repairs. Plumbing, Electrical and Handyman Services are generally the most used during the course of a year and we know that tradespersons whom are not held accountable just charge what they like. We have invested significant time in obtaining the most cost effective and transparent contractor services to ensure that our clients benefit from our scale with lower costs of repairs. We regularly save our clients 30% - 40% off the cost of these services mitigating their exposure to price gauging by contractors in the market.

Tax Benefits and Depreciation

Once you have the above 2 components right, it is time to make sure you are not leaving any unnecessary money in the pockets of the ATO. There are many strategies that are available to you, we are not the experts in this field however we partner with Perth’s best Tax Accountancy whom know investment property inside out. They know all the options available to each client and set the best Tax Strategies dependent on the outcome the client desires. A average accountant can be leaving money on the table that you are entitled to claim for and most people would be none the wiser to know that they are not doing their job as effectively as they could. They potentially are not keeping up with the ever-changing landscape of the tax system and educating themselves around ensuring they know exactly what benefits are available to their clients.

Tax Depreciation – This is the most basic yet most overlooked aspect of investment property ownership and the benefits it brings. A compliant Tax Depreciation Schedule is an absolute must for 99% of investors to give them the ability to write down the values of the depreciating aspects of the residential investment property. As by way of example, the yearly benefits can range from $2000 to $15,000 dependant generally on the age of the building and or any improvements to the property, it has nothing to do with the location of the home as some investors think this is something only for high end properties, it absolute is not. Imagine being able to write off $15,000 per year over the course of ownership, offsetting your exposure to the rent being added to your taxable income, in turn, placing a large portion of funds back into your pocket, not that of the ATO.

You need the experts...

Thought Leaders Real Estate Investment Management Division had identified these problems many years ago and have been working hard to educate its current and new investors to allow us to do the heavy lifting and correctly set their investment property to their maximum efficiencies. We can facilitate, by way of our partnerships and affiliations, all of the aspects above, we do it day in and day out and regularly set our investors investment properties perfectly for their needs.

We are not just Property Managers, we are Investment Property Specialists in the true sense of the word, we have a rounded and encompassing knowledge of everything investment, we are exceptional property managers with the highest desire to make your investment property work its absolute hardest for you.