This is a question on a lot of property investors’ minds this year as holding costs go up, along with interest rates and the cost of living in general.
More investors are dipping into their savings to cover increased mortgage payments, and more are selling. But there are things you can do other than selling, including optimising your rental income by finding a proactive property manager, that will allow you to hang in there until interest rates start to fall.
How do you know it’s time to sell?
When interest rates are high, it’s tempting to cut your losses and get out. But even if you are tapping into savings to finance your property, think carefully. If you can ride it out, an investment property is an excellent safety net for retirement, and with every passing year you are paying off more of the capital. With interest rates almost certainly coming down in 2025, you will have better cash flow that goes into your property and not to the bank.
It’s also about the quality of the property. Here in Sydney’s Northern Beaches, we tend to have excellent tenants who always pay the rent, so investing in blue-chip property here is generally a safe long-term bet.
Having said that, if you’re really struggling, you might need to bow out. Have a chat to your financial advisor, bank and accountant to help you make that decision.
And if that turns out to be the best decision, we are always happy to talk to you about getting the best possible price for your property and ensuring no money is left on the table.
How can you optimise your investment?
It’s often said that you make your money when you buy a property, and this is another reason that Sydney is an excellent place to invest. With high-quality properties and an amazing lifestyle on offer, this is a world-class city that will always draw people.
As we’ve said, an investment property here will generally be a sustainable investment that generates a steady income over many years. But there are things you can do to optimise your investment so that it makes more money over the long term.
Proactive property management: This will ensure that your property generates the maximum possible income without the headaches. A good property manager will find you great tenants who will look after your property and pay their rent on time. In turn, they will look after those tenants and organise any repairs in a timely manner, as well as conduct regular inspections to ensure your property is well looked after and small problems don’t grow into big ones.
Simple renovations and maintenance: This isn’t your own home, so you need to be strategic here, and we can advise you on what you need to do and what you can leave. In general, kitchens, bathrooms, flooring and windows are all important. Remember, a solid, well-maintained property does not need to be highly luxurious to appeal to tenants.
Looking after your property will do two things – improve its capital value and reduce the likelihood of it ever being vacant. And these works are all tax deductible, saving you money in the short term.
Keep an eye on trends and changes: A property does require a little more work than other investments, and this is where some investors slip up, forgetting to put up the rent or not keeping up with current legislation.
An effective property manager will do these things for you, tracking the rental market to ensure that you are receiving what you should in rental income, and staying across all tenancy legislation to avoid any expensive legal bills.
Finally, talk to us.
As real estate professionals, we are always happy to chat to people about what changes they may like to make to their rental property to attract a wide range of tenants, as well as explaining our property management services. Feel free to give us a call.
