Why, How & What


Before commencing your investment strategy it makes sense to take stock of your finances in order to make informed choices by understanding the numbers that count.

The calculators and spreadsheets available here will help you make well informed property investment decisions from setting goals to helping you prepare your tax return so feel free to download and utilise them and if you require assistance please contact us.

Budgeting & Financial Management


Budgeting is a spending plan that allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.

Budgeting is simply balancing your expenses with your income. If they don't balance and you spend more than you make, you will have a problem.

Many people don't realize that they spend more than they earn and slowly sink deeper into debt every year.


Why Budgeting is so Important

It ensures that you will always have enough money for the things you need and the things that are important to you and following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.

Once you create your first budget, you may want to map out your spending plan or budget for 6 months to a year down the road so you can easily forecast which months your finances may be tight and which ones you'll have extra money.


Extending your budget out into the future also allows you to forecast how much money you will be able to save for important things like your holidays, a new vehicle, your first home or home renovations, an emergency savings account or your retirement.


Using a realistic budget to forecast your spending for the year can really help you with your long term financial planning and you can then make realistic assumptions about your annual income and expense and plan for long term financial goals like starting your own business, buying an investment or recreation property or retiring.


Analysis & Cash-Flow


Understanding cash flow is a critical element of property investing and can be the difference between a solid long-term investment and a costly mistake.


Negative cash flow

Often investment properties can generate negative cash flow so you must put money in each year to cover the difference between the total cost of the property (interest repayments, rates, insurance, maintenance, etc.) and the total income (rent and tax breaks).


Investors do this because they expect a long-term profit and over time the rental increases that accompany inflation should mean this ‘top-up’ is no longer necessary.

Unfortunately, some investors don’t know the cash flow of their property before they buy and don’t realise something is wrong until their cash flow dries up and they get the bad news from their accountant.


Always do the numbers first.


Miscalculating cash flow

It’s easy to miscalculate cash flow…your estimated rental income might be over-optimistic and you might also assume full occupancy (ie. 52 weeks a year) or conversely, you might underestimate maintenance costs or insurance.


Investors who get the cash flow of their property wrong can quickly run into problems as they may either have to raise additional cash to prop up their property each month (potentially putting them under great financial stress) or sell…and selling property under pressure is never ideal as these investors can lose a lot.


Sadly, this is a common mistake.


Work out your cash flow

To understand the cash-flow on a potential investment property you can download and use the free calculator provided to give you an idea of your end position.


If buying that property will put strain on your finances, then find a property with better cash-flow and when doing your figures factor in possible interest rate rises and potential vacancies.

In addition, if the company selling you a property provides a cash flow report, don’t take it as gospel. The figures can always be manipulated so get your accountant or advisor to work through them.


The number one rule is: ‘Don’t buy a property without knowing what your cash flow is’.

Records & Management


Professional property investors tend to keep good investment property documents but most of them don’t speak with their accountant until tax time.

As a result, they end up delaying their tax return trying to find the right documents to give to their accountant.


You can download and use the investment property income & expenses spreadsheet to give your accountant the required figures.


The property spreadsheet template is free and simple to use.


Documents your accountant needs

For your investment property tax, you can provide your accountant with all of your documents and let them take care of it for you.

However, most professional investors give their accountant a summary of the income and expenses for their properties to lessen their accounting fees.


This is also a good chance for you to check your cash flow position with the property and to identify expenses that are abnormally high.


Additional information

Your accountant will also need to know some information about your property aside from the income and expense figures:


  • The address of the property

  • The percentage of the property that you own

  • The date purchased (if purchased this year)

  • The date the property started earning rental income

  • Provide a list of assets purchased and sold to assist your accountant to calculate your depreciation deductions or provide them with a copy of the Depreciation Schedule


Your investment loan expenses

The borrowing costs for your investment loan will be treated differently by the tax office.

In most cases, the interest is deducted when it’s paid and the borrowing costs are written off over several years and for this reason, it’s important to give a breakdown of each to your accountant rather than a total of the costs for the home loan.


Ultimately, you should speak to your accountant or advisor for specific financial advice that can take your personal situation and needs into account.