As you embark on the exhilarating journey of managing a housing investment portfolio, it's essential to navigate the waters with foresight and strategy. In this article, we've set out information regarding four considerations that could make the difference between a smooth sail and stormy waters in the realm of property investment.

Define an investment strategy

At the core of a successful housing investment portfolio is a well-defined strategy. Your strategy should align with your financial goals, risk tolerance and time horizon. Whether you're seeking consistent rental income, long-term capital growth or a blend of both, a strategic approach could be your North Star in a dynamic market.

Some of the factors you may wish to consider when defining your strategy are set out below:

• Interest rates may influence the financial performance of your housing investment portfolio. When interest rates rise, mortgage costs can also escalate, potentially impacting your cash flow and diminishing the attractiveness of new investments. Conversely, during periods of low interest rates, your borrowing power might expand, enabling you to pursue new opportunities. As part of your investment strategy, you should factor in interest rate projections to consider whether your portfolio will remain financially viable and aligned with your objectives.
• The tenant dynamics of your properties may also play a pivotal role in your investment strategy. Stable, reliable tenants can provide consistent rental income and reduce vacancy periods. Common considerations include the demographics of your property's location, such as proximity to educational institutions, business hubs, or leisure areas. Additionally, fostering positive tenant relationships and offering well-maintained properties can help to enhance tenant retention, creating a dependable revenue stream.
• The tax implications of your housing investment portfolio may also impact your returns. Understanding how rental income, capital gains and deductible expenses interact with tax regulations is vital. Factors like negative gearing, capital gains tax and depreciation allowances could influence your bottom line. Your investment strategy should involve consulting with independent tax and finance experts who can guide you in optimising your tax position and maximising your net returns.
• Potential liabilities can emerge from various corners. This might include property damage, legal disputes with tenants, or unexpected market downturns. Your investment strategy should incorporate risk management strategies, such as comprehensive insurance coverage and contingency funds. These measures act as a safety net, shielding your portfolio from unforeseen challenges that could otherwise erode your hard-earned gains.

Self-managing your portfolio vs. outsourcing

Deciding whether to manage your housing investment portfolio independently or entrust it to experts is another relevant factor. Each path has its pros and cons. For example:

• Managing it yourself could offer control over decisions and costs, but may also require a deep understanding of property management, tenant relationships, and legal obligations.
• On the other hand, outsourcing to professionals could provide relief from the day-to-day minutiae, but may also entail associated management fees.

Exploring your comfort level and capacity to handle these responsibilities could be key in determining your course.

Explore gearing

Investment opportunities often involve capitalising on leverage – borrowing money to expand your portfolio. You may wish to consider whether your financial situation allows you to acquire another property and whether this would align with your overall investment strategy.

Before you think about investing, you should always seek independent financial advice. Once your investment plans are sorted, this is where Suncorp Bank can step in. Contact a Suncorp Bank home loan specialist for more information on choosing the right loan for you. Whether you’re a seasoned investor or just starting out, one of our lending specialists can help guide you through the process.

Home loan investment options

When expanding your investment portfolio, it can also be helpful to understand your options regarding deposits and equity. A higher deposit can potentially reduce your interest payments and increase your borrowing power, while tapping into equity from an existing property could provide a funding source for your next investment. Weighing these options against your financial circumstances can help you make informed decisions aligned with your investment goals. As above, it is important to seek independent financial advice when considering which investment options might work for you.

Tools that can help: navigational aids for your journey

To steer your housing investment portfolio towards success, you may also choose to leverage tools that facilitate effective management. For example, you may consider using calculators or dedicated software to input data related to costs, rental income, insurance premiums and mortgage payments. Tracking these details not only streamlines your record-keeping but could also simplify tax time by providing an organised overview of your financial journey. You should make your own enquiries into the tools that are appropriate for you.

For more information about home loans, get in touch. Suncorp Bank has a team of lending experts who offer obligation-free home loan advice.

Talk to a home lending expert

Published 14 November 2023