You followed the advice of a friend or colleague or family member, or someone else a few years back and bought an investment property, and now it seems that it is costing you more than you could possibly hope to make out of it.
Selling the property is out of the question, and you can't keep up with the repayments.
Let's look at a couple of things that could be wrong, and what you might be able to do about them.
Maintenance costs are going through the roof: Avoid this issue by newly building your investment property, rather than buying an existing older property.
If you're stuck with an older property you should consider the services of a Property Manager.
This is a person who for a small fee each month will be able to determine if a maintenance item is really needed or not.
They will also be able to engage a professional trades-person who can make any repairs and not rip you off.
Often Property Managers can get much better rates through tradespersons because they are booking a lot of work.
Also, the trades-person is likely to do a good job or risk losing future work with the Manager.
A good Property Manager will also be able to advise you of any preventative maintenance that can be done, saving you a lot of money in the future.
Rental income is far below the cost of your mortgage each month: The cause of this can be varied.
It is possible that you paid too much for your property in the first place.
Before purchasing seek the advice an Investment Property Agent to determine if the property you are interested in buying is ideally suited for investment, and priced correctly for investment purposes.
Some areas in the capital cities will have reasonable buying prices, but the rental income is far below what is needed to repay a mortgage.
This could be because the rental market is flooded with properties in the area, or the region has a bad reputation for renters.
Again, correct advice will help you to buy in the right area.
If the property price was right, then it is possible the agent who priced the rent and obtained tenants for you is not familiar enough with the investment property market, and has offered the property at too low a price.
The solution to this is simply find a new agent who specializes in rental properties.
The new agent may advise you to make some changes to the property itself to improve the rental income, such as new carpets, changes to gardens and so on.
Be aware that a small gap between the rental income and mortgage payment is normal, and can be used to effectively minimize tax exposure.
Not seeing the tax benefits you expected? You will need to obtain a depreciation schedule from a quantity surveyor.
This itemizes the exact schedule of costs over a set period of time, and what value certain items of the house will lose.
These can be possibly claimed back over time by a good tax agent.
In order for this to be effective you will need to have purchased a new house, or had one built yourself.
You will also need to have the services of a tax agent who is familiar with such matters.
There are many more areas we could cover, but these are the important points.
If you have any questions Dynamic 8 Property Investment is a qualified property investment specialist.