A property portfolio doesn’t happen overnight – it requires planning and ongoing review of your circumstances. The younger you start out as a property investor the earlier you’ll become financially independent, according to Roy Sanderson.
Roy is the Managing Director of R J Sanderson & Associates Pty Ltd. The firm was voted Accountant of the year for 2015 in Victoria under the People’s Choice Awards. The accounting and taxation consultancy firm are very proud of the award and according to Roy, “the award is the result of our very dedicated team who genuinely care about our client’s future and financial stability”.
Roy worked as an accountant with AV Jennings Homes for six years at the start of his career, followed up by a further six years with a commercial builder in Victoria.
With twelve years in the property industry, he opened an accounting practice which specialises in property-related tax returns for individuals, companies, trusts and Self-Managed Super Funds. This accounting practice now boasts over 45,000 clients and nine offices, mostly in Victoria, although the firm works with clients anywhere in Australia.
“My property background and experience is shared at our monthly full-day training sessions which all accountants attend,” says Roy. “Our staff are not only dedicated but determined to be the best in the business to advise clients on all sorts of tax matters. Taxation issues for property investors can be complex and I believe it’s quite important for investors to have an accountant who has a passion for – and a thorough understanding of – property investing.”
Roy noted that it’s vital for investors to build a team of well-qualified professionals to advise them, regardless of whether they’re just starting out or they already have a substantial portfolio. A property-savvy accountant is a key member of this team. While most accountants have a general knowledge of the taxation issues relating to property investment, a firm that specialises in property investment can provide huge advantages to clients in maximising the value of their investments, claiming all available deductions and advising on complex structuring questions.
Apart from building a successful accounting and taxation advisory business, Roy has also amassed an extensive property portfolio. His first property purchase was a family home at 24 years and he has continued to purchase more property as his equity, income and rents have increased. “I recall my first home when I borrowed that absolute maximum I could, based on my income and borrowing capacity. Over the years I borrowed the maximum a couple of times to allow me to continue to buy property.”
Roy’s property portfolio includes investments in which he’s a joint venture owner or partner with another person or number of people. Some of his holdings include:
|ROY'S PROPERTY PORTFOLIO|
|Southbank||Vic||Apartment||Sole principal residence|
|Berwick||Vic||2 houses||Jointly owned (50%)|
|Mt Martha||Vic||House||Family trust|
|Mt Martha||Vic||2 houses||Investment trust (50%)|
|Mt Martha||Vic||2 houses||Investment trust & SMSF (50%)|
|Pakenham||Vic||Townhouse||Investment trust (50%)|
|Prahan||Vic||Apartments||Investment trusts (5%)|
|Bundoora||Vic||2 townhouses||Investment trusts (5%)|
|West Melbourne||Vic||2 units||Investment trusts (5%)|
|Windsor||Vic||2 units||Investment trusts (5%)|
|Carlton||Vic||2 units||Investment trusts (5%)|
|Dandenong||Vic||2 apartments||Investment trusts (25%)|
|Melbourne||Vic||Apartment||Investment trusts (50%)|
|West Melbourne||Vic||Unit||Investment trusts (50%)|
|Chinchilla||Qld||2 houses||Investment trusts (20%)|
The cost price on all properties (Roy’s share) is $6,266,433 but the market valuation is approximately $11,380,000. His interest or part-interest in these 29 properties has allowed his wealth and equity to grow as the properties have increased in value. Roy’s clients benefit greatly from his combination of accounting knowledge plus real-world experience in property investing, both residential and commercial.
Roy Sanderson has offered 7 Secret Tips to increasing your property portfolio
1. Start Young & Somewhere
The younger you are when you take that big step to buy your first property, the better off you’ll be in the future. So many clients get close to retirement and say “if only I had bought something earlier.” Take little steps as it doesn’t happen overnight. As equity, income and rents increase then you can look at another investment some years later.
2. Assess Your Borrowing Capacity
Every person has a limit as to what they can borrow based on their income, expenses and assets. Get your finance broker to assess first so you know what your limits are when you go shopping.
3. Buyers Advocate
Consider using a buyers advocate to locate a good property investment. Roy says his last 12 properties were purchased with the assistance of a Buyers Advocate.
4. Property Manager
The property manager is crucial to having a property portfolio which has minimal problems. My preference is to use someone local to the area of the property, but be sure they do thorough reference checks.
5. Increase Rent
Even if the rent increase is only $5 per week, every year you should increase rent. Only weak property managers will suggest the rent does not increase (unless there are unusual market circumstances leading to a softer rental market.)
6. Joint Ventures
Consider joint ventures with people you know who may be in a similar position of not quite having enough to buy an investment property. But it’s crucial to outline the plan and document it so there’s no misunderstanding down the track. Seek advice for any agreement and run this by your accountant. API magazine covers joint ventures and small private syndicates on a regular basis.
7. Ownership Structure
The most important is maybe the last! A good accountant will review your circumstances and consider if the investment should be in a personal name, joint name, an investment trust or a Self-Managed Super Fund (SMSF). This is your starting point before you sign the contract, which should always be signed as “your name and / or nominee”.
R J Sanderson & Associates Pty Ltd consult to clients all over Australia either by phone, email or on the website www.rjsanderson.com.au or email@example.com. The firm welcomes enquiries from API readers anywhere in the country.
Roy notes that travel to see your accountant is generally tax deductible.