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Following the implementation of several changes on loan restrictions, self-employed property investors are expected to be hit the hardest in terms of budget and financing.
Jacqui Zielinski has recently transitioned from being a bank employee to running her own digital agency—all while holding an impressive 10-property portfolio worth around $3 million.
According to her, she knew very well that her career choices would impact her serviceability as an investor.
“I kind of expected it because I know where the banks stand when it comes to [self-employment] and how you need to be there for at least a couple of years,” she said.
However, unlike other property investors, Jacqui isn’t afraid to let her portfolio sit for a while because, after all, it consists of good real estate assets.
The property investor shared: “There's been a year or so that we didn't do anything and that was our highest growth year because we'd bought at the right time, the right properties … We just were able to sit back and have them grow.”
One of the reasons behind her success in balancing her self-employment and her property investment portfolio is her trusted accountant. It could undeniably be quite harder to get financing as a self-employed person, so a lot of people tend to maximise their tax benefits by “mixing” their business and their personal life, according to Smart Property Investment’s Phil Tarrant.
“If you look to show losses in your business by trying to gain tax effectiveness, you can struggle to secure financing as a result of it. You need to show profit … in order for a bank to be comfortable to lend you money,” he explained.
For Jacqui, as complicated as it could get to chase success in both her business and her property investment journey, having a good accountant on board has definitely helped her navigate her way through the different landscapes. Like many successful property investors, she believes that communication is key—it is vital that your accountant understands your plans and the goals you want to achieve.
She said: “It's been years since I've been in a lending role, but the accountant's trying to do the right thing in the sense of saving tax … You [just] need to be showing your income if you want to get finance approved.”
“There are so many things I could potentially claim on it tax-wise, but I'm going to have that conversation with my accountant and say, ‘This is what the overall plan is,’ ” the property investor added.
A final advice to budding property investors: Don’t be afraid to talk about money with professionals you trust.
“[Be] happy and comfortable talking about money … A lot of people get scared talking about money … and it really holds them back,” Phil concluded.
Tune in to Jacqui Zielenski’s episode on The Smart Property Investment Show to know more about the impact of educating yourself, how to find a balance between business work and investment, and the simple but effective ways to improve your current portfolio.
Serviceability refers to the ability of a borrower to make repayments on a loan based on the loan amount, their income, and expenses which are factors being considered by financial institutions to approve the loan.