What to do next after you purchased your first investment property (list 5 instructions)
1. Property Management
A good property manager is worth their weight in gold. Property management is a full time job and handles many things including finding a tenant, collecting the rent, maintenance issues ect. Paying a professional takes the pressure off owners so they can focus on continuing their wealth creation. Those thinking they can save money by doing this themselves will quickly find that every week a property is vacant becomes expensive quickly. A property manager being the first point of call ensures peace of mind and that investments run smooth as possible.
Acquire a good accountant in preparation for tax time. This could mean the difference between getting hundreds or thousands of dollars back in refunds. If the property is new or recently built, organising a depreciation report to maximise the return will help investors gain the maximum return on investment. Keeping accurate records of all income and expenses associated with the property will make tax time easier, allowing us to get out tax return quicker and putting money back into our investment faster.
Mortgages can come with an introductory or honeymoon interest rate which is low for a time. Be sure to know when the introductory rate finishes, the fees involved and the interest rate after the introductory period finishes. Weather or not you have an introductory rate, interest rates tend to fluctuate so it is a good idea to monitor them. In a competitive market like today, interest rates are low and banks are competing for business, refinancing may be an option to get a better rate. A good mortgage broker can help you with this but you should be active in managing your mortgage.
Buying the right investment property should mean the investment is positive cashflow with tax incentives and does not cost money year on year. Keep your eye on your accounts and get a clear understanding of all incomings and outgoings. Remember that although an investment should be as automated as possible, other people may make mistakes. Do not be afraid to challenge any fees or charges as they come up.
Property markets tend to move in cycles. Understanding where your property investment sits on the property cycle will help you to understand expected market movement. The expected market movements will play a role in the plans you have for your entire portfolio development.