Most people think negotiating great prices on their investment properties is the only way to save, but savvy investors know how to unleash significant savings throughout the lifetime of your hold. They understand that carefully crafted property portfolios take much planning and expert advice to ensure you find high-performing dwellings matched to your needs. Keys to further success lie in structuring their investments correctly from a financial and taxation point of view, with a firm debt reduction strategy in place. These factors working in harmony can create powerful savings, enabling investors to continue to build their portfolios and fully achieve your financial goals.
1. Structured finances. Investors can save $1000s each year off their interest rates alone through well-structured finances. Interest rates are not a set and forget situation. Your finance needs to be addressed every three to four years to ensure you’re still on the best deal. It’s far more effective to work with a professional broker to achieve this, rather than finding a deal online or directly dealing with a bank. A broker will have more alternatives available to them to help benefit your end goal.
2. Debt reduction strategy. Paying down debt is not often talked about, but it can be a very powerful way to save 10s of 1000s of dollars over the life of your investment loan. This involves paying off more than just what’s owing on your interest only repayments. By contributing extra funds to your investment mortgage and paying off the principal where you can, investors can significantly reduce your interest payments and instead choose what to do with the savings.
3. Maximise ownership structure. Professional accounting advice on the best ownership structure matched to your personal situation can result in huge savings e.g. purchasing through your self-managed superannuation fund (for those with balances of at least $200k) can deliver great rewards through tax-free rental income and zero capital gains tax (conditions apply, so please seek professional advice). Other ownership structures include trusts, where funds distribution can benefit other family members too.
4. Tax depreciation schedule. Engaging a qualified quantity surveyor to provide a tax depreciation schedule results in ongoing annual tax savings on new property for the entire hold of the investment. While there is an upfront fee for your schedule, savvy investors realise that it’s not about the cost but the value that service will provide over time. They understand it’s best to work with a professional whose industry knowledge is current and adheres to the most recent legislative rulings on depreciation.
5. Leverage purchasing opportunities. Buying the right property requires more than just the skill of being able to conduct an online search for your next piece of real estate. Savvy investors know it’s essential to purchase in the right street, in the right suburb and in right Local Government area for maximum capital growth opportunities. They work with professionals to harness the power of advanced software which pinpoints their best buys, giving them immediate cash back in their pockets from Day One.
6. Engage a professional team. Working with property professionals saves you time, money and stress by leveraging their skills and knowledge in the investment space. Savvy investors not only work with dedicated buyers agents to source the right property, but to gain referrals and benefit from the invaluable expertise of other experienced professionals in their network. By using only the best in their fields, you won’t get stuck paying out money to rectify costly errors made along the way.
There’s so much more to saving money on your investment property portfolio than on the purchase price alone. Poor advice can be costly and slow a savvy investor down. Your team of professionals will help you gain far more savings than you possibly can as an individual – money that’s better off reducing your debt or purchasing your next high performing investment. Seek out an experienced buyers agent who can help you assemble the right team – they’re like gold when they help you achieve your investment outcomes.
