Portfolio Review – Step 7

“An investor’s ability to create true wealth from property investment is dependent on the composition and health of their portfolio”, highlights Jason Isherwood, Managing Director of Capital 360. “The best way to keep your portfolio in good shape is to subject it to regular reviews at least once a year.”

A portfolio review should assess five key areas of each property in your portfolio and provide the chance for you to revisit your overall goals as an investor. If the results show that your portfolio is performing at its optimum level, there should be no reason to change any aspect of your investment strategy. However, more often than not, a review of your portfolio will reveal areas of opportunity to release hidden value in equity, rental income and tax benefits.

Remember to utilise the individual skills of the Capital 360 team of professional property advisors to help you systematically review the different aspects of your properties. Capital 360 recommends you cover the following 6 points as part of your portfolio optimisation process:

1. Review your goals
   It is highly likely that the individual goals you had for each of the properties in your portfolio have changed over time. Draw upon the original property investment strategy that you created before purchasing each high performing property and assess whether your short, medium and long term goals are being met or whether they require adjustment.
2. Review the value and performance of your properties
   Have your professional independent property valuer and property manager determine the current market value of each of your properties, to reveal any capital growth or rental value increase.
   Any untapped equity can be used to re-invest or reduce your overall risk profile as an investor. Likewise, any growth in rental value can be used as a legitimate reason to increase rents and improve your overall cash flow position.
   Also, use this time to seek advice on local buying, selling and rental market trends (including new developments or changes to zoning etc.), as these could affect the value of your properties in the short and long terms.
3. Review your add value potential
   Your property valuer and property manager should also be able to help you reveal any untapped opportunities to add value by conducting a renovation or development. However, you should also contact a project manager or independent property manager for their advice about worthwhile additions.
   Add value potential can be one of the most advantageous areas to assess when reviewing your portfolio, because it provides you with the opportunity to;
   • increase the value of your property, allowing you to unlock additional equity for reinvestment
   • attract better tenants and be able to increase the rental value of your property
   • achieve better taxation benefits when assessing your depreciation schedule
4. Review the performance of your home loans
   Contact your mortgage broker or finance strategist to explore the following (for each of your home loans);
   • The appropriateness of your current loans and whether they will allow you to meet your reviewed short, medium and long term investment goals
   • The suitability of current loan features
   • The possibility of refinancing to unlock equity and re-invest (and weighing up the costs versus the benefits of doing so)
   • The cost effectiveness of your current interest rate structures (fixed versus variable)
5. Meet with your advisor
   You will probably complete this step each year around tax time, but it is important to meet with your advisor to analyse your tax planning and minimisation potential, income allocation and asset protection. Remember to inform your advisor of any changes to your portfolio before they conduct their analysis.
   Finally, make sure that each of your advisors assists you in the process of following through with any proposed changes to your assets. Also, have these advisors schedule in appointments every six to 12 months to conduct follow-up reviews. This will ensure any changes made now will continue to benefit your wealth creation ability into the future.
   If you don’t have the time to round up and meet with your team of professionals, you can consult an independent property advisor to coordinate the process for you. They should be able to provide you with a comprehensive opportunity assessment, outline the steps required to unlock portfolio value and implement an action plan to maximise your profits.
   There are lots of untapped opportunities and thousands of dollars to be gained by performing regular full reviews of your portfolio.
6. Develop a plan for the next 12 months
   Just as you would meet with your financial planner annually to review your overall financial situation and put a plan in place for the next 12 months, so you should do the same for your property portfolio.
   Taking into account any changes in your circumstances, your property portfolio performance, areas to add value and / or increase income, and changes to the macroeconomic environment and the property market outlook by state – you need to develop a plan with your property advisor for the next 12 months to ensure you have a comprehensive plan in place and the team of specialists to help you execute on this strategy. It is only with a plan that is revisited regularly that you will achieve your long term property investment goals.

If you would like to know more about Capital 360’s free Portfolio Review service or would like to arrange an obligation FREE Initial Consultation with one of Capital 360’s investment experts, please contact us online or call us on 1300 227 360.