Like your tenant, most jobs pay you weekly, or monthly and it's not everyday you look in your bank account and see a whole year's rent resting there.
Unless you’ve won the lottery, most Australian property investors have simply worked hard to buy an investment property as part of their retirement plan.
So it’s no surprise many people don’t know what to do with a whole year's rent when they suddenly have access to it, especially with interest rates so low and money in the bank not working as hard as it should. This capital can be powerful if you use the opportunity wisely.
Here are our top 3 ideas, which obviously will vary depending on your own personal circumstances.
1. Consolidate your debts
COVID-19 has reduced rents, increases vacancies and put a significant number of people out of work, or on reduced incomes as businesses deal with the pandemic. As a result, many landlords have seen the balances owing on their credit cards and personal loans creep up. Given the average credit card interest rate is about 17%, paying off any expensive credit card debt and wiping the slate clean is always a good starting place. This can have the added benefit of reducing your chance of missing a monthly credit card payment and improving your credit score, which ultimately can even save you money on your regular property loans.
2. Reinvest in your existing investments
Whether it’s a new coat of paint, brand new carpet or a kitchen makeover, it is important to invest back into your investment property to maximise your rental return. While this comes at a cost upfront, often the return you can make is well worth it. For example, freshening up with a new coat of paint and bathroom renovation may cost $10,000, but if you are able to make an extra $50 a week in rent, that’s an extra $2,600 in rent each year, which is a 26% return per annum on the cost of the renovation. Try getting 26% year after year in the stock market!
3. Take control of your finances and your future
Have you ever tried getting a business loan? Or borrowing money to help one of your kids with a deposit for their first home? If you have, you’ll know that all these things come with a lot of strings. By using your Futurerent to take control of your finances without involving the bank, you will have control over your future.
What is Futurerent?
Futurerent is a loan-free alternative to the banks that gives property investors up to $100,000 of rental income in advance. Futurerent empowers property investors to do more with their own rental income, whether that’s to invest or to fund personal goals.