One of the biggest benefits of negative gearing is of course the tax refund.
Negative Gearing is a fantastic way to reduce your tax bill and build your investment property portfolio but it can put a lot of pressure on your cash flow.
There are a few ways that you can manage your loan repayments and other expenses related to your investment property, so that you can continue growing your portfolio.
One of the disadvantages of negative gearing is that the rental yield is less than the costs of holding the property.
These costs include mortgage repayments, insurance, water, council rates, maintenance and repairs.
Speak to your accountant about varying your PAYG installments to help you with cash flow.
Your loan repayments are no doubt your biggest expense and fixing your interest rate, is a great way to manage cash flow when negative gearing.
Don’t fix your loan rate if:
- You are planning to sell the property in the short term
- You are planning to refinance in the near future
- You want the flexibility of making repayments
Make sure you estimate and have a clear picture of all income and expenses as well as the return on your investment.
RealRenta automatically populates the rental ledger for you and landlords can also create other ledgers for other expenses that are not rent.
Also, RealRenta will automatically send Reminder Notices to tenants as soon as they are late with payment and also alert you, the landlord.
Make sure that you engage an accountant with a lot of experience in dealing with property investors, who will also prepare a depreciation schedule for you.
Also, avoid hefty repair costs by ensuring your property is well maintained.
Make it easy for your tenants to submit maintenance requests to you by using the RealRenta platform, where all interactions will be date and time stamped for your reference.
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