Expert Advice with Sam Saggers 10/08/2016
Like anything worthwhile in life if you want to invest in property you’re going to have to be willing to learn.
There’s no way around it.
And just when you think you’ve got one strategy nailed down it will suddenly stop working for you, leaving you with no idea how to move forward.
The following 5 property investing hacks are time proven ways to grow wealth...put them to work for you!
1. Switch up your funding
Rates have really dropped considerably over the last 12 months or so. Take a look at your current loans. Would it be cost efficient to obtain one with a lower interest rate and/or better terms?
For example, do you have a principal and interest mortgage? Would it be better to switch to an interest only loan so that you can lower the payments and improve your monthly cashflow?
Work out the figures and then move your loan(s) if it makes sense.
Don’t forget to add in the fees and charges of both the existing and a possible new loan when working out your calculations.
2. Set up an offset account
If you don’t have an offset account tied to your loan you’re missing out on some great ways to increase your wealth.
This kind of a savings account is tied to your mortgage, with the balance of the account being ‘offset’ against your loan balance.
A simple example of how it works is shown below:
Mortgage amount $100,000
Offset account $ 10,000
Instead of paying interest on $100K, you’re only paying interest on $90,000!
3. File a PAYG variation
Keep more money in your pocket by filing a PAYG variation.
When you file the variation you’ll get your refund with every pay packet rather than at the end of the financial year.
Use the additional monies as you see fit, however I’d recommend using them to continue growing your wealth.
4. Set up good buffers
Good buffers can mean the difference between a short term career as a property investor and selling up short before achieving true financial independence.
What is a buffer?
A buffer is simply money you set aside that is earmarked for expenditures on a particular investment property.
A good rule of thumb is to make your buffer large enough to cover two to three years of ownership costs.
Ideally, the buffer will be earning interest in an offset account that is tied to the home loan.
5. Get a depreciation schedule
Ask your tax accountant if he thinks you could benefit from a depreciation schedule. If he does, obtain a depreciation schedule from an experienced quantity surveyor.
Don’t think that just because your property isn’t new that there’s nothing you can claim.
You might be surprised.
Sam Saggers is CEO of Positive Real Estate and Head of the buyers agency which annually negotiates $250 million-plus in property. Sam's advice is sought-after by thousands of investors including many on BRW’s Rich 200 list. Additionally Sam is a published author and has completed over 2000 property deals in the past 15 years plus helped mentor over 2200 Australian investors to real estate success!
Read more expert advice articles by Sam
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
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