Do you want to take control of your finances? Knowing your numbers is the first step in understanding your financial situation and making smart financial decisions.
It’s important to understand the numbers related to property. The top 4 things you need to consider are:
1. Income
Start by considering all of your income sources: personal income, investment income, and income from any businesses.
2. Expenses
The next thing we need to consider is our expenses. This includes mortgage payments, rates, insurance, maintenance costs, body corporates, property managers, insurance, inspections, and building pest inspections.
3. Cash Flow
We then need to deduct our expenses from our income, and this will give us our cash flow.
If you’re investing in property, I recommend using a sophisticated investment calculation tool, where you put all the figures in, and it will calculate the before and after tax cash flow.
Tax has a big impact on your cash flow, so make sure you’re looking at the net after tax cash flow.
It’s best to do the cash flow calculations before you purchase any property.
Understand the numbers, make sure you’re comfortable and you’ve got a safety net factored into that cash flow, and make the decision on the next property purchase based on the numbers.
This will help you make an educated decision about any property purchases.
4. Budget
It is important to have a budget make sure you’re on track.
If you’re comfortable with numbers, you can do your own spreadsheets or use a budgeting tool. There are many useful resources online to help you.
If you’re not as comfortable with numbers, you can always hire a professional to help you out.
Finally, don’t forget to review your budget or cash flow forecast regularly.
Things like interest rates and income can change, so make sure you’re reviewing your budget at least every 6 months or if you situation changes.
If you would like to make a time to discuss your property requirements further click here.
Regards,
Geoff Tomkins
Buyers Advocate
PH: 0404 852 781
