How to Run Your Property Investment Like a Business

Actively managing your investment portfolio is vital to the success of any positive investment return. However, this may not be as straightforward as it sounds. A clever way to approach your investment is to treat it like a business.

Great team, great results

As in any workplace, a great team will produce great results. This same principal can be applied to managing your investment portfolio. Choosing a quality property manager can take the hassle out of micromanaging your properties, giving you the time to research your next investment venture.

When considering a property manager, treat the selection process like a job interview. Ask them questions such as: “What are your strengths?” Or “How many properties have you managed?”

In addition, don’t be afraid to perform some role-play with them. You want to be confident that they have the skills to handle a tenant who is not paying rent or a tradie who has completed an unsatisfactory job.

Moreover, just like in a job interview, ask all potential property managers for references and testimonials. Talking to fellow landlords who’ve had experiences with a property manager will help reassure you that you are selecting the right person for your management team. Another avenue is to research reviews of property managers on an agent comparison website such as streetnews.com.au.

Quality products, clever marketing

The next component to a successful business is to have a product that people want. Again, this is no different when it comes to leasing an investment property. Consider what groups of tenants will find your investment appealing and market it to those groups.

For example, if you property is a three bedroom home with a yard, it is likely that it will appeal to a family with children, rather than a single occupant. Ensuring the property is child-friendly with working locks, screens on upstairs windows and secure garden gates will reassure parents that the home is a suitable place for their child.

Moreover, just like a business, your property needs to remain competitively priced to attract tenants and you should review the rent regularly, say every 6 or 12 months (and with every change in tenancy), to ensure it remains competitive in a market sense. No successful business did well without a good product and a little bit of promotion.

Tax

Whether you are running a business or managing a portfolio of investment properties, it is likely that your relationship with the taxman will become quite cozy. And because the government wants to take a slice of your profits, you need to be aware of all the ways you can avoid paying too much tax at the end of the financial year. Tax strategies for property investments such as negative gearing or the National Rental Affordability Scheme (NRAS) can save you a bundle in outgoings, if you know how to work the system.

For example, an investment property is said to be negatively geared when the costs of holding it – including interest costs – exceed the rent received. Because properties are an income generating investment, this loss is tax-deductable and this tax deduction can be put towards reducing the tax payable on your other assessable income.

Finally, approach your investment portfolio as if you were expanding your business. Control your personal spending and plan for the future by investing more than the minimum into the mortgage. Paying more off the mortgage than you need to will set you free to expand your portfolio and can potentially set you up with a tidy nest-egg at retirement.