Buy more property with these 5 selling tips:
How you manage your money can have two consequences: it’ll either make you more money, or it won’t. Strategic property investors know how to use their money to make more money and buy more properties sooner. So, let’s look at five ways to maximise your financial potential:
1. Avoid cross collateralising
Cross-collateralisation occurs when more than one property is used to secure either one or multiple loans and it’s an important loan structuring issue of which many property investors are not aware this structure may block your borrowing capacity or your ability to get finance in the future.
2. Ask: is your principal and interest loan slowing you down?
One school of thought is that paying off principal as well as interest on an investment property takes you one step closer to positive cashflow and living off your rental income. But, when you’re still in the asset accumulation stage of your investment journey, it can slow down or freeze your purchasing power, which means fewer years for capital growth to do its thing.
3. Offset is your best money-making bet
For investors and homeowners alike, an offset account can be a very effective tool in reducing loan interest and keeping funds separate for tax purposes. Rather than earning interest on your savings, the balance is theoretically deducted from the loan balance, which in turn, reduces the interest charged to the loan and therefore the life of your loan.
4. Use PAYG variation to put more money into your pocket sooner
Plenty of people see their tax return as ‘bonus’ money, which is fine if you plan to use it for a holiday or to buy a new sofa.
But by filing a Pay As You Go tax variation through your accountant, your estimated tax refund is divided across the year and paid into your salary.
5. Understand the importance of cash buffers
Having a “rainy day” cash flow buffer is a smart strategy which means you’ll be financially prepared just in case you need to cover unexpected expenses. This will prevent you dipping into your savings or having to bump up your mortgages to cover unexpected costs.