A Simple Checklist For Building A Property Portfolio
Building a property portfolio with multiple rental incomes and opportunities for growth is a great way towards financial freedom and stability. A property portfolio is a collection of property investments owned by an individual, a group or a company. With the right strategy, you can start building your own property portfolio that will make you less dependent on your pension or on your super. Here’s a checklist to make it easier:
Figure out how much you can borrow.
Assess your finances first before looking for a new property. Consult your lender or bank to help you determine how much your current property is worth and how much equity is in it. If your current property is fairly new, there might be not much equity in it, and it might be best to give it some time to grow. Once it has enough equity, you can use this for deposit in a new property.
Devise an investment strategy.
Once you figure out your finances, you need to know your investment strategy. Should you aim for rental yield or capital growth? Rental yield gears for a rental income that can cover costs of owning the property. Capital growth focuses on the growth of your properties’ values. You can focus on capital growth if you have a high income and can cover mortgage costs.
Either way, you can go about it by having a positively or negatively geared property. A positively geared property has a gross rental income that is greater than the costs of owning the property. A negatively geared property has less income than the ownership costs. The losses incurred can be offset against your salary, which reduces your taxable income and ultimately, the tax you have to pay.
Picking your property.
You can start looking for properties—figure out the type of property you want and where you want to buy. However, make sure that you factored in all costs that comes with buying an investment property such as agent fees, council rates, insurance, and funds for when the property is not rented.
Look for a property manager.
A person who can look after your investments is essential to building a property portfolio with less hassle. A property manager local and knowledgeable in the area of your property would be very helpful to you.
Plan for the long haul.
Building a property portfolio, especially a good one, needs you to be committed for the long haul. Property experts advise that one should hold on to their properties for seven to ten years to achieve the biggest benefit. Have contingency plans for any situation, especially financially.
You need to tick off all of these to have a nice property portfolio. If you need any help or advice in building your portfolio, feel free me to message me in any of my social media accounts!