You may have come across the term “Asset management” in your reading about property investment. What this really means is that as investors, we need to be monitoring on a regular basis just how our asset is performing. This applies to any type of investment asset, property, shares and so on.
By monitoring we mean that we take a good look at our assets at least on an annual basis, whether the asset is still giving us the best return.
As an example, we have clients who purchased houses in the Elizabeth area for as little as $30,000. With a rental income of $90 per week (hard to imagine now!), this type of property gave an excellent gross return of almost 16% per year.
The same property now would be worth, say, $120,000. The rents have gone up to say, $170 per week. Whilst this is a good return on the original investment, the actual return on the present value has dropped by more than 50% to around 7% per annum.
Looking at this scenario, it may be worth considering selling this property and putting the profit into a brand new home, giving a better return, better tax benefits and very few maintenance worries for many years to come.