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As savvy property investors, you know how important it is to regularly evaluate the properties in your portfolio.

By Helen Collier-Kogtevs, Managing Director with Real Wealth Australia

I typically ask myself whether my investments still stack up every six months. I ask myself questions like: is it achieving the capital growth I projected? Are the rents increasing? If I were shopping for real estate today, would I still buy this property?

Too many investors get complacent with their investments and even when they do review their properties, they don’t really know what they’re looking for.

This was the case with Carly, a client who wanted to buy three properties in the next five years. She already owned two properties: a house in Melbourne and a small unit located in a regional Victorian town.

The unit had a small mortgage of $90,000 and was returning $135 per week in rent. Once tax and depreciation was factored in, the property was pretty much neutral.

As a low-maintenance, low-cost property, Carly figured it was doing okay, ticking along nicely and that it was a good idea to keep that property in her portfolio.

She couldn’t see the problem with holding onto it. But in my view, Carly was failing to address the most important question, which is: what is the opportunity cost she was losing by holding on to that property?

In reality, the unit was stagnant. It wasn’t increasing in value each year by any noticeable amount, nor was it returning positive cash flow.

It had a small mortgage of $90k but was worth around $140,000.

So my advice to Carly was to flick this low-performing property and pay off the mortgage, leaving her with over $40,000 after costs to leverage into a new investment.

And that’s exactly what she did. After meeting with her broker, Carly discovered that she could actually use the profits from the sale as a deposit on a new home worth up to $325,000.

So as you can see, reviewing your properties – really digging into the nitty gritty – can be crucial for your long-term success.

Helen Collier-Kogtevs
Managing Director at | + posts

Helen Collier-Kogtevs is the Managing Director of Real Wealth Australia, a leading education and mentoring company for real estate investors. Not only is she a highly successful property investor and an educator, but also a best-selling author, and a philanthropist. Helen is particularly passionate about helping people, especially people who are keen to create wealth and make a difference in their lives, and she has been mentoring thousands of new and experienced investors in their pursuit of wealth creation through property.

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