No matter how well (or badly) your portfolio performed in 2015, there are steps you can take to improve your bottom line in the New Year.
Blogger: Jason Paetow, director, AllianceCorp
The New Year is upon us and I hope you all had a great time spent with family and friends and that you are now refreshed and revitalised, ready to give 2015 all you’ve got.
If you reflect on the past year, can you look back with pride at all you’ve accomplished and could you happily say that you gave it all you had? You might remember a time when you could have invested but didn’t because of your cash flow or other reasons, or perhaps you took an opportunity when you had the chance, and are now enjoying some excellent capital growth.
No matter where you’re at – whether you gained or lost during 2014, you can always benefit from a financial health check and from a thorough review to ready yourself for 2015. So let’s take a look at what you need to do to be fighting fit for 2015!
1. I will review my investment goals and my investment plan
Every year, I do a thorough check of where I’m at with my property investment goals and see where I can improve. I do this every year to make sure tha the direction I’m heading in is where I want to be going. Your goals are going to shift, and that’s ok - you just need to make sure that your investment plan shifts along with them. The start of a New Year is a great time to be proactive and to get your finances sorted out – so use the time wisely to go over your investments. A structured approach to your finances will ensure that you’re in a great position to capitalise on any possible opportunities.
Some things to consider:
• Was there anywhere where things were better than you had hoped? How about where they were worse?
• Why do you think these outcomes occurred, and were you prepared for them? If not, why?
• Think about your cash reserve. Is it higher or lower than at the start of last year? Why?
• If your portfolio’s performance exceeded your expectations why was this? If your portfolio’s performance did not meet your expectations, consider why?
2. I will think about my tax position
As property investors it’s in your best interests to be as up to date with tax as possible. The Australian government is very good to property investors and offers a relatively wide range of benefits regarding negatively geared properties and other concessions around depreciation of assets. You need to consider whether you’re maximising the benefits available to you, and if you think you’re not – you need to figure out why!
Was your tax income for the financial year what you expected?
Did you pay more or less tax, or was it what you expected? How about your spouse/partner?
Have you maximised the tax benefits available to you within your investment portfolio?
3. I will map out my expenses for the upcoming year
If you want to make 2015 your year then you need to be on it when it comes to your finances. Part of being on top of your finances is making sure that you monitor your incomings and outgoings, and than you make allowances for any possible changes to your income and cash flow. Be conservative when estimating, and be mindful of any possible reductions in bonuses, tax benefits or other lump sum cash amounts that may be reduced.
If you think there will be changes you need to ensure you have enough money in your buffer or master facility to cover the deficit.
Analysis of your cash flow is more than just incoming and outgoing money. You need to ask yourself:
• Did you have any cash flow problems in the last year that required you to dip into your savings or buffer, or that necessitated you selling a property?
• When do your major financial commitments, and when do they lie in the year? If you know what you have to pay and when it can help to shuffle things around to ensure you’re not scrabbling around or short at any time.
• Do you have any bigger money items like school fees or a holiday planned?
• Also, have any of your houses moved from negatively to positively geared in the past year? It may be worth a review from a tax perspective.
4. I will maximise my portfolio’s potential
If you’re wondering how to increase your equity position you might consider something like a small renovation, which is a great way to add value to an existing property in your portfolio. If you’re looking for a way to get more borrowing power from your portfolio then this might be just the thing to help you. Remember – don’t overcapitalise, and make sure that you do your research. Look at comparable properties in the are and see who has had success with a renovation.
I do a complete review of my portfolio twice a year, and also on an ad hoc basis after any new purchases or value add renovations. By being thorough you maximise your potential for growth and you ensure that you’re not going to miss out on any possible opportunities.
About the Blogger
Jason established AllianceCorp in January 2008, having identified the demand for an independent property advisory service. Jason’s work in property investment has spanned 15 years, hundreds of satisfied property buyers and millions of dollars worth of Melbourne property.
Jason’s qualifications include:
• Qualified Financial Planner
• Certified Mortgage broker
• REIV-Licensed Real Estate Agent
• Licensed builder
Throughout his career, Jason has helped everyday people build successful property portfolios here in Melbourne. It’s his own approach to business and property investment that drive the entire company’s values of Transparency, Independence, Integrity, Efficiency, Diligence and Value for Money.
With knowledge gained from both personal and professional experience, Jason leads the team at AllianceCorp in a relationship-focused environment that provides education, informed advice and professional services.