It’s that time of year when we do a personal shakedown of all our faults and failings. A period where we make promises to ourselves to become the best darn fixer-upper we can be.
There are entire industries built around this concept of evolution and improvement. Diet programs, meal delivery plans and new gym membership are flooding ad space across TV radio and social media right now – it’s a frenzy of self-improvement.
But there is a significant personal upgrade program you can make in 2023 that won’t involve physical exertion beyond firing up the computer and making some calls.
I’m talking about improving your financial affairs, or more specifically, your property investment plans.
Here are the five essential New Year Resolutions every property investor should be nailing to ensure a fiscally healthy year.
- Get lending fit
The most important move you can make this year is checking and rechecking your loan arrangements.
We’re all aware of the RBA’s fight against high inflation through interest rate rises in 2022, but 2023 will deliver new challenges and those who aren’t right across their mortgages are at risk of having a terrible, horrible, no good, very bad year.
This is especially so if yours are among the 23 per cent of all Australian loans which the RBA estimates will transition from fixed to variable in 2023. As these products flip into variable interest, they’ll experience an immediate two-to-three percent interest rate rise. For those holding $1 million in debt, that equates to $30,000 a year more in repayments.
So, make time to engage with an expert mortgage broker. They can assist in weeding through the details and securing the best possible lending arrangements your circumstances.
- Ignore the horror headlines
There’s been an extraordinary level of negativity among media headlines of late. The market has slowed, there’s no doubt. Rising interest rates combined with softening international economic performance have helped fuels clickbait stories across all outlets.
Just recently the International Monetary Fund came out and suggested our nation’s property was priced well beyond the affordability of the average Aussie and that could lead to monumental retractions in value.
But the truth is, Australian real estate is among the most historically resilient asset classes on the planet over the long term. Given inflationary pressures could soon ease, and unemployment is at historic lows, there’s plenty of reasons to feel we are at the bottom of the price cycle for now.
Bad new attracts easy eyeballs. Instead of fretting, read the predictions with a grain of salt and keep your view on the long term.
- Use proper experts
I know it appears self-serving to suggest you use appropriately qualified and experienced property advisors, but it will be more important to adopt this practice in 2023 than ever before.
Uncertainty surrounding several market drivers means you need the smartest and most up-to-date minds looking after your affairs.
Don’t be shy about relying on accountants with property-specific expertise. Also, a quantity surveyor should always be your go to for insurance and construction cost assessments, as well as depreciation schedules. Then there’s well-connected buyers’ agents for acquisitions, plus property investment advisors for strategy and implementation.
Just be sure to complete your own comprehensive due diligence and background research on any expert you want to engage before you sign them up.
- Do a budget
Now is the chance to establish a home budget that you can implement, track and amend as needed throughout 2023. The start of the year is a clean slate, and the demands from your employer probably haven’t fully kicked into gear yet.
So, set aside time right now to spreadsheet the inputs on your personal finances. Work through all your essential and non-essential spending and marry it up to your household income.
Like health and fitness goals, tracking your financial progress allows you to make the ongoing changes needed to maximise results.
Running a household budget also allows you to build a cash buffer for emergencies – which could prove very useful this year.
- Prepare early for tax time
I know that thinking about doing you tax returns in January seems ludicrous, but those who gain the most benefits are normally the ones who start their planning early.
With 30th June 2023 in mind, take a moment now to look at what you are and aren’t doing to maximise your tax return. There are exceptional depreciation benefits you could be taking advantage of right now. Look at upgrading your investment with simple, quick-to-install elements such as ceiling fans, carpets and window blinds.
Also, some upgrades will take a little more planning including booking in tradespeople. A renovation of the kitchen or bathroom, or retiling a downstairs area, will deliver benefits in terms of increased rent and greater tax depreciation.
Now is also the time to order a depreciation schedule. Work with your accountant and quantity surveyor to arrange an inspection and report. The sooner you complete a schedule, the better your claimable benefits.
You’ve been handed a golden opportunity at the start of the year to implement changes and mindsets that will yield excellent results from your property investment. Don’t miss the chance to get stuck in – your future self will be thankful.