My Property Investment Tip #12
Run your portfolio like a business!
An easy trap to fall into, is to mix your property portfolio money with your other money. Don’t do that. It’s bad management and leads to trouble.
You should be running your portfolio like a business. It should have its own bank account (usually a separate offset account against the mortgage on your own home). All rents and your tax return should be paid into the account, and all property bills should come out of it. Loan repayments, insurance, maintenance costs, body corporate (if applicable).
Now the mortgage repayment on your original mortgage of your own home is NOT one of these expenses and shouldn’t come out of that account. That’s a personal expense. But all repayments for all other loans that relate to your investment properties should.
Then, like any good business you should maintain an amount of cash in your property account to act as a buffer to ride the waves of cashflow. Vacancies, big bills etc. That way you should never get caught out or run out of money.
At the end of the financial year, after your tax return lands, then compare the balance of the account. If there’s more money in there than the same moment 12 months earlier, you’ll know your portfolio is paying for itself.
If it’s made a loss, at least you’ll know by how much and then you can set up an automatic top up transfer every pay day to at least make up the difference.
You should be putting some extra money into your property account anyway so that regardless of what happens with the market, capital growth and rental growth, the balance of that account is still growing and you’re still on your way to a deposit for the next property one way or another!
Remember, the people who actually OWN the properties are the ones who make the money. It would be my absolute pleasure to help you my friends any way I can to be in that group.
– Daimo
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Daimien Patterson is the CEO of Integrity Property Investment, a property investment company based in Australia. He regularly produces books, blogs and videos on the topic of property investing, helping thousands of people create financial security and freedom through education and property investment. Get started today.
