News and Media

Looking forward to looking back

Real estate author and buyer’s agent, Patrick Bright, says regardless of whether you own one, three, five or more properties, now is the time to analyse your financial position.

At the start of a new financial year it’s a good time to sit back and analyse your financial position in the same way that a small business does (or should!). Regardless of whether you have one or 10 properties you need to treat them all like a business and undertake regular reviews; no less than six monthly.

As a stock take, here are a few things that you should ask yourself:

Am I taking advantage of all the tax deductions I am legally entitled to?
Tax rules and regulations change every year and so you need to keep up-to-date with the current environment to make sure you know what you are entitled to claim. Of course, everyone has busy day-to-day lives so it’s easy to miss things. This is why it’s essential to have a switched-on accountant who not only completes your yearly tax return but also provides you with ongoing advice as to what you can and can’t claim as legislation changes.

What is my plan for the future growth of my property portfolio?
By writing down clear goals for the future growth of your portfolio you’ll be able to determine a plan as to how much money you’ll need for the necessary deposits. You will need to factor in any major changes to your likely income or expenditure streams when examining the timeframes needed to save for the deposits. For example, if you’re planning to start a family then you’ll probably drop back to one income for at least a year or two while your expenses will increase, which is why it’s desirable to begin your portfolio as early as you can.

Am I on track to reach my retirement needs?
Make sure that you don’t underestimate what it’ll cost you to keep your living standards at the same level or better than your current lifestyle, as you are likely to spend more in your retirement years; particularly if you want to travel. If you’re not on track to meet your financial goals then it’s better that you realise this sooner rather than later so you can make adjustments now. Small adjustments over 10 or 20 years will make a significant financial difference over time.

Am I paying the lowest interest rate available to me?
Just because you’ve had a long relationship with a particular institution is no reason to stay with it if it is charging you too much. It is advisable to review your interest rate level every one to two years to make sure that you’re getting the best deal, as new loans and packages continually enter the market. Don’t be afraid to shop around. A better interest rate can literally take years off your mortgage and allow you to add to your property portfolio much faster. You may even find that your current lender is able to match its competitors’ rates, saving you the hassle of moving; but you’ll never know unless you ask!

Wealth Creator. Patrick Bright, ‘Looking forward to looking back’. July/August 2011. Reproduced with permission.