Investing in property can be daunting at first; however, if managed correctly, an investment property can help to give you the financial security you have been looking for.
Through a combination of improving your property with important additions to add value and understanding the different tax deductions available to you, you can ensure that your property is financially self-sufficient.
Whether you are new to the property investment world, or you are a seasoned veteran, it’s crucial that you set yourself up for success from the outset.
Choosing a property that meets your requirements, in the right location and that is sought after will ensure that you have every chance of creating a financially self-sufficient property.
Take the time to find the right property and avoid committing to anything until you are certain it is the right decisions. Once you have secured a property you are happy with, you can start putting measures in place to make it as profitable as possible.
Let’s take a look at just a few ways that you can create a financially self-sufficient investment property with your next venture.
Understanding Tax Depreciation
One way that you can lower your taxable income each year is through the tax deductions associated with your investment property.
There is a range of different tax deductions that come into play when you own an investment property. For example, you can claim interest charged on loans, holding costs, accounting costs and rental expenses such as council rates, advertising, gardening, cleaning, insurance, realtor fees, land taxes and water rates.
You can also claim for depreciation to the building and fittings over time, as well as other costs associated with loans related to the investment. Request a tax depreciation schedule online to learn about your deductions and find out how much you could be saving each year.
Install Solar Power
Adding solar power to your property is a great way to boost the rental returns on your investment property. From as little as four thousand dollars, you can install a 5kw solar system that can generate more than enough power for tenants in a typical rental property.
As your tenants will pay less in energy bills, you can increase the rental price of your property, allowing you to generate a bigger return on our investment.
What’s more, as most solar systems come with a warranty of fifteen years or more, you know that your investment in your property addition is protected.
Installing solar power in your home also ensures a constant power supply, even during outages. A steady power supply makes the property more attractive to long-term tenants, especially those whose work relies on energy-powered gadgets and devices like computers.
Add An Effective HVAC System
Having a well-functioning heating and cooling system to control the indoor temperature is a top priority for Australian renters.
Installing an effective air conditioning unit will allow you to increase the rental price of your property a little each month.
Adding an air conditioning system to your rental property might cost you between six and eight hundred dollars.
However, if you can charge an extra thirty to fifty dollars per week in rent, you will soon earn your money back and continue to earn higher rents thereafter.
Everybody likes to get a little extra, and that includes your tenants. For example, a dishwasher will cost you five to six hundred dollars, but it can increase your rental income by two to three hundred dollars per year.
Considering the average life of a dishwasher is ten years, you will get a decent return on your investment over time.
Although this additional income might not seem like much, when you add it together with other minor additions to your investment property, you can end up with a significant increase in your earnings each year. This allows you more financial security with little investment up-front.
Create A Financially Self-Sufficient Investment Property
To create a financially self-sufficient investment property, you need to lower your costs while increasing your rental income.
Investing a little money in your property to make it more attractive to renters, will allow you to increase your rental rates, while through tax deductions, you can potentially save thousands of dollars each year.
Combining these approaches, you can generate enough income, and save more money so that your investment property is financially self-sufficient going forward.