Tips

Tips for Property Investors

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Frank Valentic from Advantage Property offers his expert advice on managing your investment properties.

HOW TO GO ABOUT SELLING A TENANTED PROPERTY

If the time has come to sell your investment property, these simple steps will make the process easier for you. 

Let your tenants know 

This is pretty straightforward. Giving your tenants plenty of notice is necessary as you won’t be able to organise open for inspections without doing so. It’s important to allow your tenants enough time to process the news as this will help with the transition process and the presentation of your property. 

Prior notice required 

If you are planning to show through prospective buyers before your tenants have vacated, you will need to give prior notice to access the property. In Victoria, 24 hours is required before gaining access to a tenanted property. 

Incentives are important 

It’s a good idea to maintain an amicable relationship with your tenants during the sale process to ensure your property is shown in the best light. You could offer a rental discount or regular cleaning to help show off the dwelling as you may not have control over furniture or styling. 

Understand your rental agreement 

If you would like your tenants to vacate, you will need to be familiar with your rental agreement. With a fixed-term agreement you cannot force your tenants to vacate, but you can end the contract if they consent in writing. In the absence of a fixed-term agreement, you are required to give 65 days notice to evict in Victoria.

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WHAT’S THE DIFFERENCE BETWEEN NEGATIVE AND POSITIVE GEARING? 

Let’s start with the basics. Gearing in property buying terms means borrowing money to purchase an asset. There are three main types of gearing – negative, neutral and positive. Negative gearing is when you borrow money to invest in property and the income you make from that asset, that is rent, is less than your expenses. Simply, this means that you’re making a loss. Making a loss when investing in property is not ideal but, currently, negative gearing allows investors to deduct any losses they make on a property from their taxable income. Neutral gearing is when you borrow money to purchase an asset with the income being equal to the amount borrowed. This means that you are breaking even on your investment and unable to make any deductions to your taxable income. Positive gearing is when you borrow money for an investment and make money from it, in the form of rent. This means that you are earning a consistent income from the property; it also means that you will make a capital gain from the sale of the property if real estate values increase during your ownership. As you’re earning income from your property, you won’t be able to make any deductions from your taxable income and the income from your investment property will be subject to income tax at your marginal tax rate.

 
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