It’s all in the budget
September 4, 2019
Budgeting not only applies to balancing a company’s books or the household finances, but is also vital to the successful financial planning of owning an investment property.

Savvy property investors realise that they must prepare a budget to cover all contingencies throughout the lifetime their investment property. It is vital that careful financial planning be front of mind when considering the purchase so that when outgoings arise, the cost does not eat into the investor’s personal finances.

If you already own an investment property, it’s not too late to start budgeting for any recurring and anticipated expenses that will arise. In preparing your budget, it is suggested that you take into account the following:

Quarterly

Water and council rates, Strata levies

Annually

Insurance premium (building, contents, landlord protection, public liability) Factor in rent to cover 2 weeks vacancy per annum

4-7 years

Replacement of hot water system

5 years

Repaint

8 years

Re-carpet

9 years

Replace blinds and window coverings

10 years

Replace stove, dishwasher, clothes dryer

Failing to adequately budget for such expenses can create the potential for financial disaster for highly geared investors and delaying necessary work due to insufficient funds can actually cost more in the long run. Having a preventative maintenance program and budget in place will save you money and stress and may even prevent the loss of a tenant!

It is one of the golden rules of property investment that in order to maintain a sound investment the property must not only be presented well, it must be well maintained, thus securing the best tenant and achieving the best rent. This can only be done by prudent budgeting.