Gone are the days where the banks are so willing to loan you a significantly high amount of money to invest, with options like an interest-only period for extended periods.
Nowadays, the property market is tough in many locations across Queensland, but you have to take the good with the bad.
The good. You have the perfect tenant; the ideal property manager; all costs are covered; you’re earning enough to pay for expenses and facilitate the debt; in a growing market.
The bad. You have a tenant unable to pay their rent on time. Or have a property manager who fails to fulfil their contractual obligations; or your repairs become exorbitant, or worse, interest rates go up and or the property market declines.
Hopefully, you’ve bought into the market at the opportune time. And perhaps, due to interest rate cuts, you are positively geared and possibly have cash left over even after tax.
Hopefully, you’re not in that unfortunate trap of substantial debt with an old interest-only loan with no principal paid down. Where you find the value of the property has reduced due to a falling market. And those income tax refunds, let’s hope you put that towards your debt.
Hopefully, if you are suffering such circumstances, you are surviving financially and can make your way back up. It all comes back to ‘Why?’. Why did you buy the property and was it for the right reasons? Did you buy the property merely to ‘save tax’?
You are becoming a landlord.
If you’re only starting and are merely buying to save tax, you might want to rethink that strategy. Have you done your research on the property? Is now a good time? Have you discussed this with which experts?
Who will look after the property? Are you sure you are leaving your hard-earned assets in the hands of the most capable? It would be best if you did due diligence on this topic, as finding the right property manager is critical to the longevity of your property. Ensuring the property is maintained means you won’t have a hefty bill for repairs down the track. Insist on property inspection reports, and obtain copies of them. Diarise inspection dates in the future and follow up those with your property manager, even if they haven’t passed this information onto you. Yes, you (hopefully) have insurance (for damages or loss of rent due). Still, you shouldn’t have to go down that road if the property manager does their work per your arrangement.
Remember, if your tenant fails to pay any rental arrears, the property manager must notify you. They must not wait until the arrears become so excessive that the likelihood of rental recovery becomes diminished.
When you find yourself a good property manager, work with them, stay in close contact and always seek out what you can do better as a landlord. This relationship will secure a good tenant, and this good income can secure you through tough times.
DISCLAIMER: The information provided is general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of a qualified advisor before you make any decision regarding any products mentioned. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly Accounting & Super Pty Ltd employees or agents shall not be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
The name, ‘Accounting and Super’ defines exactly what we do. Our firm is boutique style, meaning we only deal in a specific space, and that is small to medium enterprise and self-managed superannuation. We are a highly experienced team of accountants and aim to deliver quality, personalised service to our clients.
Accounting & Super
Townsville Office Level 1, Suite 3, 54 Denham Street
Ayr Office 132A Young Street