As we move past another financial year, it’s an opportune time for property investors to reassess their portfolios and strategies. With over two decades in real estate, I’ve observed a growing misconception about the financial realities of property investment that deserves attention.
Contrary to popular belief, many investment properties today are not positively geared. This means investors often need to supplement their rental income to cover ongoing expenses. While tenants may perceive rent increases as pure profit-driven decisions, the reality is far more complex.
The cost of living is rising for everyone, including property owners. Expenses such as mortgages, rates, management fees, and maintenance all contribute to the overall cost of providing rental accommodation. These factors, often overlooked in public discourse, play a significant role in determining rental prices.
To foster a more balanced understanding, it’s crucial to educate tenants about the true costs of maintaining a rental property. Without this awareness, we risk seeing more investors exit the market, potentially exacerbating housing shortages and further driving up rents.
For current and prospective property investors, now is an ideal time to develop a comprehensive budget and maintenance plan. This proactive approach can help manage costs throughout the year and ensure your property remains an attractive, appreciating asset.
Consider factoring in the following for example:
1. Regular maintenance items (e.g., annual deep cleaning of air conditioning units and gutters)
2. Periodic replacements (carpets and blinds every 5 years, paint every 7 years)
3. Safety measures (replacing flexi hoses every 8 years)
4. Annual servicing of remotes and garage doors
In my experience, investors who plan for these expenses tend to hold their properties long-term, benefiting from capital growth while experiencing less stress along
the way.
By fostering open dialogue and understanding between landlords and tenants, we can create a more sustainable rental market that serves all parties involved. Remember, in property investment, as in many aspects of life, prevention is indeed better than cure.
For a comprehensive budget and further investor tips down load my e-book via the link: https://macwell.com.au/e-book-download/