FAQs - Tips
Common Mistakes Made When Investing In Property
Buying an older property
Properties built before 1985 do not qualify for any building depreciation. This means you are unable to maximize the tax allowances available, as you can with a purpose built new property.
Do you have the skills, time and money to do all the maintenance that an older property needs?
Incorrect financial structuring
Buying 50/50 in a both partner’s names when one partner is the high income earner can be costly. Knowing how to set this up correctly can save you thousands. Having the wrong type of loan at a high interest rate, high fees etc can also be costly. These can all be negotiated by mortgage brokers with access to many lenders, so the best product can be selected to meet your requirements. .
Waiting until the end of the year for tax deductions
Tax deductions for depreciation on the building, fixtures and fittings can all be received on a regular basis rather than waiting till the end of the financial year and then again waiting to receive your tax return cheque/payment. Residential Property Management Services can show you how your accountant can arrange for your tax refund to be included in your regular “take home pay”.
Making an estimate of tax deductions each year
People often have their accountant make a calculation regarding tax claimable. This has the potential to create problems if the amount is either over or under estimated.
Property Investment Planning will make sure you receive the correct tax deductions and keep the tax man happy.
Managing the property and tenants yourself
Engage a good property manager. They have the skills and experience to find a good tenant and go through a rigorous reference checking procedure. They will also prepare a lease and all the necessary documentation, ensuring that all criteria is met under the Residential Tenancies Act.
Your property is inspected regularly and a report sent to you regarding the condition of the property, including the details of repairs if required.
Property Managers can also access many things the general public cannot, for example the national tenancies database register which will help you select the right tenant for your property.
Property managers have the training to handle situations with problem tenants and are fully aware of the laws regarding notices, warnings, removal etc if needed. The small fees charged are tax deductible and after all, this is an investment so why do it yourself?
Being emotional about the purchase
A quality product will attract a quality tenant - however, you are not going to live in it! It does not matter if you have a spa in the bedroom at home and the investment property does not, or the window coverings are not what you have at home. This is an investment and you have to look at this from that point of view. However, the properties are still built to the highest standard and the décor is expertly selected to be modern, but neutral. This will ensure it appeals to a large variety of tenants, hence lower vacancy rates and a better rental return.
Insurance
Landlord protection insurance is very affordable and should really be mandatory, not an option.
It can be purchased at low cost and you will be covered if a tenant damages the property, injures themselves (legal liability insurance), or will cover your rent if the property becomes un-tenantable due to damage or the tenant defaults.
The cost of this insurance is also tax deductible too.
Each policy varies greatly, so we can help find the best landlord insurance for you.