While most real estate agencies are always trying to tell you “today’s a great time to sell”, at LongView we believe that if you own quality property, you may never wish to sell, but use that growing value to buy another. And another (and so on).
An increasing number of our clients own multiple properties and this creates both more opportunities and more issues than single-owners. Here are some of the things you need to consider as the owner of multiple properties:
1. Your property life-cycle and investment goals
Earlier in life people often want to invest for maximum capital growth and long term wealth creation. Later on, some people want more passive income for a comfortable retirement. Sometimes it makes sense to have some high yielding property to throw off cash to pay for the cash costs of high capital growth properties. Getting the optimal “shape” for your portfolio and considering how that shape may be best to change over multiple decades is part of a full property portfolio plan
2. All properties are not created equally
We often review a clients’ portfolio and they hold some really strong, high performing assets but sometimes also have a poor performer or relatively bad investment. Often times we find people don’t realise the size of the lost opportunity they miss when they could have offloaded a poor property early and “jumped on a faster train” by a disciplined effort to find and buy a much stronger performer
3. The financing of your property portfolio
How you’ve financed your portfolio can have as much impact on the end result as the properties themselves. Too much debt is dangerous and can create cash challenges. Too little debt and your money is “not working hard enough for you” and stretching across a bigger portfolio with a little more debt gets your foot on a lot more capital gain. We also find a surprising number of situations where the major banks take advantage of successful property investment clients with over-priced money or nasty security or other clauses. While we are not financial advisers, we like to help identify issues that clients may want to revisit with their mortgage broker or financial professional
4. Land tax
Land Tax has become a huge issue for many of our portfolio-owning clients. Some forward planning about the legal entity structure or the location (sometimes splitting a portfolio between States has substantial land tax benefits) for the portfolio can have big impact on cash flow and overall returns. You can learn about what you can do about Land Tax here.
5. Your time
Time is your scarcest resource – the one thing you can never get more of. For many of our significant portfolio owners, the time and effort not just to manage the properties themselves, but their whole portfolio as a business can be substantial. As one client recently put it to us “I already have a job, I don’t want another one”. So now we are increasingly playing the role not just of property managers but also property business managers for our clients. We create annual budgets for revenue and expenses and target cash flows; do pre-emptive maintenance planning and report quarterly on performance to budget. We do a full risk audit up front to see all building, legal, financial, insurance and other elements of the risks and deliver special services like Guaranteed Rent to remove risks like vacancy or rental arrears.
So what’s next?
An increasing number of our clients own multiple properties and this creates both more opportunities and more issues than single-owners. That’s why we launched our “private client services” to help property portfolio owners get maximum financial and lifestyle benefits.
If you would like a more complete review of your portfolio, would like a full property business management service or want to expand your portfolio with the right buys, contact us today.