9 Ways To Review Your Investment's Performance
In order to create a high performing strategy, you need to understand how your current portfolio is performing. Spending half a day each year assessing your property and its performance can help identify opportunities to both save money and to make more money. Not sure where to start? We asked some of our most experienced property managers what they would recommend an investor focus on, and they collectively agreed on these nine key performance criteria.
1. Are you charging the right rent?
This is fundamental to your success as an investor. If you charge too much you may find it hard to attract and retain tenants, which in turn may mean your property is vacant for periods of time. And if you do not charge enough, you are not maximising your rental return.
Have a look at what similar properties are renting for in the area and talk to your Local McGrath Property Manager as they can offer expert advice here. Do not automatically look to increase rent at every opportunity, you do not want to increase the rent and then lose your fabulous tenants. Good tenants are worth their weight in gold so hanging onto them may be more important.
2. Look at the value of your property
Has your property increased or decreased in value over the last year? A lot can happen in the property market over a 12-month period. If prices have increased, the amount of equity you have in the property has also increased which is great news if you are looking at additional investment opportunities. Your McGrath Property Manager can help organise a property appraisal for you so you can better understand your property’s current market value.
3. Review your current investment loans
Work out what your outstanding mortgage balance is so you can calculate how much equity you’ve got. Also note down what interest rate you are on and how long you’ve got until the end of the fixed term. It might be that over the last year you’ve come to the end of the fixed term and you’ve gone onto a different rate which isn’t as favourable. Given the competition in the lending market you may be able to talk to your lender about getting a better deal.
4. Review your insurance
Take a look at the insurance policy you have on your property/s and make sure you are still happy with it. If you do not have insurance, consider taking out a policy to protect yourself against unforeseen issues that could cost you a fortune down the track. If you have a few properties and have different policies it may be worth looking at whether you can consolidate your policies and get better rates.
5. How are your properties performing?
Are your tenants causing constant issues, are you experiencing problems with any or all of your properties or do you find it hard to let? If you answered yes to all of these issues perhaps you have a problem property and it may be better to put it back out the market and get your money out to invest in something else. Talk to your McGrath Property Manager about this, they can help.
6. Review your team
Having a good team of experts around you can make a big difference to the success of your investment. Is your lender proactively ensuring you are on the best home loan rate? Is your accountant responsive, have they proactively been offering you advice? If you are not getting what you need, maybe it is time to look for different service providers.
You should conduct regular inspections of your property or have your property manager do it on your behalf, so you can address any potential maintenance issues. Make sure there is additional budget set aside for any unforeseen repairs that pop up over the next 12 months.
8. Review your tax situation
Meet with your accountant and discuss your property in detail to ensure you are claiming all relevant expenses and are providing them with all the necessary paperwork.
9. How is your rental yield?
As an investor it is important that you are aware of the property’s rental yield, or in other words, the amount of profit you make on an investment property. To work this out you need to calculate the difference between your overall costs and the income you receive from renting your property. Knowing this enables you to accurately assess your property’s performance and ensures you have a good idea of the ongoing return you will earn on your investment.
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