Property Investing Mistakes To Avoid
There is so much to consider when you embark on your property investment journey, and you can easily make some big mistakes if you are not careful.
Here are a few things to watch out for so that you can get the best return possible from your investment:
- Not Prioritising Your Debt
Some debts, such as a credit card, need to be paid off as quickly as possible. But there are other debts which may provide you with a tax deduction; for example, loans taken out to repair or improve your investment property.
It’s a good idea to pay down as quickly as possible any debt that doesn’t contribute to helping you get a larger tax return. Then you can start paying off tax-deductible debt.
- Forgetting To Claim Depreciation
Maximising your depreciation claims can add thousands to your tax return, so make sure you get a schedule drawn up ready for when tax time rolls around.
Don’t leave it to the last minute as this could result in a sloppy outcome which you will come to regret.
- Not Increasing Rents
Don’t fall into the trap of not increasing the rent when renewing a tenant’s lease. If you do, you may then find yourself needing to increase the rent by at least $50 in order to catch up on past stagnant prices.
When a lease comes up for renewal, consider increasing the rent by $10 or $20. Small increases are more palatable for tenants, and your rent will keep pace with market growth.
- Leaving Your Property Vacant Due To High Rent
Be smart about the prices you set for your rental properties and ask your property manager for their opinion. Just one week of a property being vacant can undo any gains you might have made through an increase in rent.
It would be much better to have a tenant locked in quickly instead of seeing your property sit vacant and losing money.
- Managing Your Own Property
It might be tempting to think you can manage your investment property yourself. But remember there are lots and lots of little jobs that go into managing a property efficiently. So leave this task to a professional which will free you up to focus on your investment strategy.
Being mindful of the potential pitfalls above will help you become a better investor so that you’ll always be ready to capitalise on new market opportunities.
* This article does not constitute financial or legal advice. Please consult a professional financial and legal adviser before making a decision.