6 Things That Affect Cash Flow When Property Investing
Cashflow maximisation is a very smart option if you wish to maintain your property portfolio. With having the stability of your cash flow situation, you can continue growing your portfolio. However, having a negative balance of cash flow can really restrict you from procuring more properties. Elements like tax depreciation can have an impact on such situations.
So how can you keep your cash flow in positives? Many investors perceive aspects like rent to be affecting their cash flow. However, there are six other factors that contribute to this.
1. Rent:
Rent is one of the smoothest ways to have a steady rental income thus have a better cash flow position. In order to maximise the rent, you need to make sure that the rental property has a substantial yield; and Also that the vacancy periods are minimized. Understanding the tax depreciation investment property may help to avoid extended vacancies.
Another way to avoid these vacancies is by procuring properties in capital cities because then there will be constant high demand.
2. Loan Repayments:
Cash flow gets really chopped off due to the loan repayment. A simple way to tackle this situation is by selecting a loan plan which is interest-only.
Since the property will be an investment the only goal will be to service the debt through the rent received. Taking a look at your depreciation schedule may give you some perspective.
3. Fees of Body Corporate:
We seldom get in touch with body corporate and it requires a hefty fee. However, it is better to completely avoid them since they can create a major leakage of cash flow. If you contact a professional for your depreciation on investment property ATO, he will furnish you with the same advice.
4. Council Rates:
Council rates are another medium to chop your weekly profits, that’s why you need to reduce them. The most optimal way to do so is by completely avoiding the high end of the given markets. Since that is where you will find the rates to be higher. Instead, use this money to have your depreciation schedule made.
5. Maintenance:
This is a very unpopular opinion but the maintenance cost is, in fact, the deadliest of them all. One of the most dangerous things you can do as a property investor is to buy an old property that requires hundreds of thousands worth of refurbishing and constant maintenance. Thus, it is better if you buy a new property.
6. Depreciation:
We have been hinting this throughout the post and we would finally like to talk about the importance of tax depreciation. People perceive depreciation as a deduction of value but what they miss out is that depreciation incurs a bigger tax return. Thus play smart here and buy newer properties since they get the most depreciation in the first few years.
Wrapping-Up:
We have spelled out everything you can do to increase that cash flow and keep it in the positive. If there is one takeaway we want you to have is to make use of that tax return on depreciation and get your depreciation schedule made.
