Six property investor resolutions for New Year’s success

Australia’s largest independent property valuation and advisory firm, Herron Todd White, has compiled a list of must-do investor resolutions to ensure a financially healthy 2019.

Angeline Mann, director at Herron Todd White, said now is the perfect time to establish practises that will ensure an excellent outcome over the next 12 months.

“There’s no doubt the start of each year provides an opportunity to reassess your goals and make plans for achieving more – whether that be health, wealth or happiness,” Ms Mann said. “Making moves now to prepare for real estate dealings in the year ahead means you won’t look back with regret come December.”

Herron Todd White’s top 2019 resolutions are:

1 – Do your budget

Investors set to gain the most in 2019 will have healthy balance sheets according to Ms Mann. “The tough finance environment that plagued borrowers in the second half of 2018 looks set to continue over the medium term – particularly with the banking Royal Commission findings due in February this year.

“Now is the time to get your financial affairs in order so you can put forward a strong case to the lenders when a prospect to buy arises.” Ms Mann said it’s essential to do your home budgets and balance sheets while looking for opportunities to tighten up spending. “Banks currently scrutinise household spending going back three-to-six months during the approval process, so be ready for a future loan application by implementing your new home budget straight away.

“Also, ensure your records are impeccably kept and up to date.” Ms Mann said while conditions are tough for borrowers, banks will compete for those with the right numbers. “Banks are eager to lend to good borrowers. “Be among this desirable subset and take advantage by shopping around your business.”

2 – Check your leases

Ms Mann said smart landlords study their existing lease details well before they’re due to be renewed. “Don’t wait to the last minute – know when your leases are due for renewal and understand the process. Being ill-prepared creates pressure and will have you making bad decisions.”

Ms Mann said residential vacancy rates, particular in our biggest capitals, had been on the rise, so locking in good tenants on long-term leases is smart thinking. “In some cases, avoiding a rent rise – or even lowering the rent come renewal time – means you can keep a good tenant longer and reduce your vacancy.” Ms Mann said raising rents to try and make up lost income due to vacancies would be a mistake.

“If your $500-per-week property is vacant for three weeks, that’s $1500 in lost income which equates to almost $30 per week. A better solution would be to reduce the rent to $480 a week and keep the tenant in place.” Ms Mann said you should also look to have your leases fall due during peak rental periods.

“While in most instances rental demand is highest in January or July, it can vary by location, so do some research to determine when tenant demand is peaking in your patch.” Ms Mann said you should also talk with your managing agent about any new tenancy laws. “There’s been some major changes to rental legislation across Victoria, while new rules are about to be introduced in New South Wales.

“Other states, such as Queensland, look to be considering changes too. “Be across any tenancy laws now by staying in contact with your property manager.”

3 – Start collecting sales and rentals information

Being well-informed about markets helps investors spot opportunities quickly, Ms Mann said. “There’s no substitute for studying actual, completed sales or rentals in a suburb across a three-to-six-month period in order to paint a picture of a market’s direction.

“If you have selected a location, start putting together a file of properties that have sold and/or leased in your price point straight away. “This will educate you on what the market is doing and provide accurate evidence as to what you should pay for an investment property so you can secure it quickly.

“Keeping a record of transactions is invaluable, and a file compiled over a minimum three to six months is absolutely essential.” 4 – Research lesser known markets Despite most transactions occurring in the big capitals cities, Ms Mann said smart investors are becoming borderless. “Everyone knows Sydney and Melbourne are coming off half-a-decade of huge value gains, and their outlook is for further price softening.

“While there will still be opportunities in these capitals to profit, savvy investors are getting outside their comfort zones and looking further afield.” Ms Mann said some smaller capitals such as Brisbane and Adelaide offer promise, but even regional centres are solid possibilities – particularly for those driven by affordability.

“A strengthening in the tourism and agricultural industries has resulted in price rises across many previously underperforming markets in regional Australia. “Don’t be tethered to past biases about markets – consider those lesser-known locations as well.”

5 – Revisit your investment goals

January is definitely a time to think about why you invest and how your strategy is playing out, said Ms Mann. “Retirement plans based on a property portfolio will involve some element of timing the market.”

Ms Mann said clever investors will be revisiting their strategy in January – particularly for those who’ve bought in Sydney or Melbourne. “You may need to delay or amend your plans if markets are softening – just be flexible so you can achieve your goals.”

6 – Contact your advisors

Ms Mann said venturing into markets without having knowledgeable, independent professionals on your side can be dangerous. “Now is the time to ensure you have a solicitor, account and other professional advisors on hand and aligned with your ambitions for the year.”

Ms Mann said these professionals will help you move fast to take advantage of markets. “Building relationships with advisors now means that when opportunities arise during 2019, you’ll be prepared to get the speedy answers you need to make fast, well-informed decisions.

“Also – be sure to deal with professionals that have a long-standing reputation of independence. “Bad advice can bring about disastrous outcomes. Look for experts who have a strong track record and no special interests beyond looking after their clients.”

Ms Mann said venturing into markets without having knowledgeable, independent professionals on your side can be dangerous. “Now is the time to ensure you have a solicitor, account and other professional advisors on hand and aligned with your ambitions for the year.”

Ms Mann said these professionals will help you move fast to take advantage of markets. “Building relationships with advisors now means that when opportunities arise during 2019, you’ll be prepared to get the speedy answers you need to make fast, well-informed decisions. “Also – be sure to deal with professionals that have a long-standing reputation of independence. “Bad advice can bring about disastrous outcomes.

Look for experts who have a strong track record and no special interests beyond looking after their clients.”