Rates Rise Today. How can Investors protect their interests?

The Reserve Bank today announced an increase in the cash rate of 25 points to 3.25%. No surprise of course but what can we do as investors to minimise the impact of more rate rises which will probably follow? 4 things come to mind. 

Property Investors Tips

  1. Make sure you have a fixed term lease in place. Why is this important? If you are on a periodic tenancy (sometimes called month to month) the tenant can give you 14 days notice to vacate. If they do so at a time where it is challenging to re let the property and you could be left with a vacant property for weeks or more. 
  2. If you think you may have to sell at some stage you would still be wise in most cases to set a fixed term even if it is 3 months at a time BUT add a clause advising the tenant the property may be put on the market. This is important because otherwise the tenants can again give you notice to vacate within 14 days when you list the property if it is within 2 months of them resigning or signing a lease.
  3.  Focus on your lease expiry dates and make sure they expire in peak periods. This positions you well to relet the property if needed and gives more confidence in insisting on rent increases to the current market rent. Therefore making sure you achieve the best returns possible after all every cent counts. 
  4. You may also be arrange a tax variation so you can receive more income as the year progress’s as apposed to getting tax back when you do your return. Talk to your accountant about this if you have not already done so. 

Rates are on the rise it is inevitable but let’s not get any surprises from our tenants along the way!

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