When you think about future-proofing your investment portfolio, you’re usually just thinking of the basics, right? Maybe you’re just thinking of the bare-bones costs so you don’t have to make such a giant investment. Honestly, makes a lot of sense here. Besides, once the rent has been landing on time for a while, it’s surprisingly easy to stop looking closely at a property. As the mortgage gets paid, the insurance renews, repairs come up here and there, and as long as nothing feels seriously wrong, the place can just keep ticking along in the background, so clearly things have to be fine then, right?
But has anyone actually sat down and looked at it properly lately? Well, not just the rent amount. Not just the current value on some property website. The full thing. What keeps costing money? Which repairs have happened twice? Has the loan been reviewed since the property was bought? Are the tenants likely to stay? Is there space that isn’t being used well? Are the records organised enough to tell what’s been spent on improvements over the years?
You see, there’s more work in it than you might have assumed, right? Before you expand and buy more, maybe it’s best to just take a step back and just look for a moment on what can be approved right now. Plus, it’s just harder to notice because it’s familiar.
Look at the Expenses You’ve Stopped Questioning
Why? Well, there’s usually at least one cost that’s been rolling on for years simply because it’s easier to keep paying it than to look into it. You get used to it, to where it doesn’t seem like a big deal. For example, it could be a landscaping contract that seems a bit high, an insurance policy that hasn’t been compared in ages, a maintenance plan nobody really uses, or a property management fee that was agreed to when the property first changed hands.
Just some examples here, and no, on their own they’re not bad. But together? Well, of course they are! So, just go ahead and pull out the last year of statements and actually read through them. Which costs were one-offs, and which ones keep returning? Is the same plumbing issue showing up again?
Has an appliance been repaired three times when a replacement would’ve cost less? Are utility bills higher than expected because something old and inefficient is still running? Sure, lots and lots of questions- you don’t need to be cheap, and you shouldn’t make tenants miserable here either (terrible idea), but anywhere where costs can be cut without cutting corners?
Go Back Through the Renovation Records
Now, you might have guessed it here, but receipts and invoices tend to spread themselves across inboxes, paper folders, old phones, contractor messages, and bank statements. Yeah, it happens. But those records may still have financial value long after the work was completed. As in years, maybe decades (rarely), but you need to keep everything renovation-related.
So, just go ahead and look for documents connected to major repairs, appliances, flooring, roofing, electrical work, plumbing, landscaping, parking areas, security systems, and any larger renovations.
Is it All Labelled Properly?
And yes, that includes before-and-after photos, permits, floor plans, and settlement documents, which can also be useful. Needless to say, it’s a lot of work; it’s not fun having to retrieve everything either. But these records can support insurance claims, future valuations, refinancing, sale preparation, and tax decisions. They can also make it easier to understand what’s already been replaced and what may be approaching the end of its useful life.
Plus, an accountant or tax adviser may also want to discuss depreciation planning for property investors, particularly if substantial improvements have been made or the property’s depreciation treatment hasn’t been reviewed since purchase. You need records of all of this (and copies) for tax purposes, if you plan on selling, and beyond. And just keep in mind here that it’s pretty difficult to review any of it properly when the paperwork is missing, or every contractor payment is labelled with something vague like “property work.”
Plus, who was the contractor? Their license number? Did they have insurance coverage for their work? Warranty?
Your Tenants have Financial Value
Well, rent increases are part of owning an investment property. Sure, sometimes it’s just for the sake of greed (some landlords only want more and more money). But taking greed out of account here, costs just go up, the market changes, and the rent can’t stay frozen forever. Sure, it would be nice, but nowadays, it rarely works like that. But looking only at the highest possible monthly amount can create a very narrow view of what the tenancy is worth.
Say there’s a tenant who pays on time, keeps the place in decent condition, reports maintenance before it becomes serious, and doesn’t plan on moving. That person is saving the owner money already. Don’t think tenants are finite, and don’t think any tenant is willing to pay some crazy amount. Plus, a vacancy can mean lost rent, cleaning, advertising, inspections, application checks, small repairs, and the possibility that the next tenant isn’t nearly as reliable.
So before pushing too hard for every last dollar, it’s seriosuly worth asking what would keep a solid tenant there.
Maybe the Loan Doesn’t Suit the Property Anymore
Alright, so once a mortgage payment becomes automatic, it can disappear from attention. Which makes enough sense, so the money leaves the account each month, nobody needs to think about it, and years can pass without anyone reviewing the loan. Which, maybe, doesn’t sound the most responsible either. But think about it for a second here because who knows, maybe the property’s value may have increased. Chances are, equity may have grown. Interest rates may be different. The investor’s plans might’ve changed too.
Even in just a matter of a couple of years! So, it’s seriosuly worth checking the current rate, fees, loan structure, repayment period, and any restrictions attached to refinancing. Of course, a different loan isn’t automatically better. It doesn’t always work that way, considering there could be closing costs, penalties, a longer term, or less favourable conditions hiding behind a lower monthly payment.
