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How to Optimise Cashflow?

Discussion in 'General Property Chat' started by MTR, 16th Apr, 2016.

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  1. MTR

    MTR Well-Known Member Premium Member

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    Thought it would be a good idea to start a thread on this, tweaking the strategy to improve your cash flow/income.

    What are you doing to increase your cash flow??

    I have been reviewing all loans and asking banks for a better interest rates.
    The best rate was with AMP 4.12% on 1.2M, that is $7,600 savings pa. Others have come to the party however not as low.

    Selling some properties that are old/higher maintenance, reducing overall debt, increasing cashflow.

    Buying cash flow properties from day 1.

    Diversifying to other asset classes/business' with higher yields


    MTR:)
     
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  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    I focus only on cashflow - building up a business.

    Wrt properties I invest only for growth. there are other strategies that are equally as good, just sharing mine.
     
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  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Keep in mind cash flow is different to income.

    Some ways to improve both are:
    - debt recycling
    - reducing expenses
    - maximising incomes
    - tax effeciency
     
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  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    - Do well in business
    - Reduce / eliminate personal debt and/or nondeductible debt
    - Keep up to date with maintenance on properties. It helps them rent easier and reduces unexpected surprises later on
    - Monitor the rent market to keep rents at optimal levels - too high and you increase vacancy, too low and you miss out on income
     
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  5. MTR

    MTR Well-Known Member Premium Member

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    yes, even the pennies add up, a simple one can be negotiating property management fees, this can be huge when you have a large property portfolio.

    tax efficiency, working on this one all the time.
    Finally sorted my Trust and distributed to my 2 daughters making significant savings on this alone.

    Some investors try to save pennies by doing their own tax or not using the right professionals and at the end they may not realise that they are in fact losing money.
     
    Last edited: 16th Apr, 2016
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  6. sash

    sash Well-Known Member

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    Penny wise...pound foolish?

    Have seen many people do this and get it wrong.

    But even with advice people get it wrong. Quite a few people in the last 10 years structured themselves incorrectly in Trusts in NSW and ended up paying huge amounts of land tax. The only certainty is whilst you can rely on experts ...you also need to understand how things work. The funny thing is these people keep making the same mistakes ...sure they have large portfolios...but they don't have the sophistication to ask the right questions to get to the correct end point. That in itself is wealth hazard...aptly they should be named accidental millionaires.

    The so call experts may not be so helpful when you are in a quandry..manage risk from the start.

     
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  7. MTR

    MTR Well-Known Member Premium Member

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    Yes, I believe a forum member posted her particular scenario with regards to investing in Trust which turned out to be an absolute disaster.

    I also believe there are some professionals who advocate Trusts for every property, this is overkill IMO and the motive is clear to me. The accounting costs would be huge, not to mention it would be an absolute paper nightmare.
     
  8. sash

    sash Well-Known Member

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    Ditto!

    Who the hell would would so many trusts..just having one company is hard enought.

    I find the effort on 30 properties under a my name easier than the stupid company BAS...returns..etc...and the ever changing rules. I just got send a $0 statement...huh MR ATO???
     
  9. MTR

    MTR Well-Known Member Premium Member

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    Would you believe Dymphia Boholt, in her previous life she was an accountant.

    I believe she has many professionals involved in her business model, say no more... Have a g/friend structuring her stuff this way on DB recommendations. Totally ridiculous and very costly
     
  10. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Same here, good strategy.
    Not much point squeezing a few dollars out here and there by optimising every little advantage possible, when making multiple extra hundred k a year in business can take very little effort.
    That is once you have an established business after going through the build up phase.
     
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  11. sash

    sash Well-Known Member

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    I know a few ....here who are holding real estate in multiple trusts smart people...but don't understand how those costs are going to escalate over time ...let alone the paperwork.

    A lot of it is driven by the fear created by some of the spruikers...by the time you realise what you have gotten yourself into..it is hard to unwind.
     
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  12. D.T.

    D.T. Adelaide Property Manager Business Member

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    You know that there wouldn't be BAS because residential rent is GST exempt, right?
     
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  13. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Why would you have 30 IPs in your own name? Your land tax must be huge? Though yours are in different states.

    I find Trusts helpful for land tax and maximising cashflow but they are more work. It evens out in favour of Trusts for me.

    I have one PM so negotiate a good rate with him.

    I have 2 builders so negotiate a good rate them with them but open to others

    I optimise cashflow by getting an awful lot of free information from here. That may be tax tips, negotiation tips, value add information, new construction information etc etc
     
  14. sash

    sash Well-Known Member

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    No...this is company not holding Resi...mostly shares.....and yes under I think 75k no GST.
     
  15. D.T.

    D.T. Adelaide Property Manager Business Member

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    Dividends are GST exempt as well mate.
     
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  16. sash

    sash Well-Known Member

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    Trusts are ok depending on states...no good in NSW.

    In Qld it is okay but only for 2-3 properties...work out what it will cost for set-up and maintaining it would be better to hold it under personal names.

    It looks like in WA ...there is an exemption for trusts...
     
  17. sash

    sash Well-Known Member

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    Yes..know that...and also know that when you distribute this yourself ...the credits for franking also flow through...anyway a topic for another day. Working on this..slowly as I want to understand the longer term implication.

    I am working on a u-beat structure legal of course..will let you know when I have it right.

    This is in preparation for my retirement...as I am an old bas$tard. ...unlike you young whipper snappers. :)
     
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  18. Blacky

    Blacky Well-Known Member

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    I think there is a balance to be sought.
    I cant imagine owning say 30properties in 30 different entities as being efficent or cost effective (not even thinking about the time to manage them all).

    The issue with having all the properties in personal name is the inflexibility of income. It goes directly to your name - and there is nothing you can do about it.

    At least having some structure provides an extra layer. Be it to move income, delay income, or at least provide some options.
    Not to mention the land tax issues, added risk, etc.

    Like I say, no one solution will fit everyone, and a balance is needed.

    Blacky
     
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  19. D.T.

    D.T. Adelaide Property Manager Business Member

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    So why all the talk about BAS then as one of your deciding factors?
     
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  20. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    NSW has the ability to spread land tax across multiple entities using personal name and companies with a seperate threshhold for each, but you run into related companies restrictions after 3.

    SA you can add trusts ad nauseum for land tax exemptions. Generally the cost of running a simple trust are less than land tax.
     
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