As I have said in previous posts the purpose of investing in property is not to get as many houses as possible. The purpose is to use property to achieve your goals. Therefore if you are not reviewing your portfolio regularly how do you know if your money is working as hard as possible for you.
Ideally you would review your portfolio every six months as well as reviewing individual properties in that portfolio. Ensure that each property is performing as expected and to its fullest. As property values increase, the yields decrease therefore you need to check that you are still getting the best return you can get. It pays to check the gross yield and your cash on cash return every six months. Do an approximate valuation every year (it would be uneconomical to get a registered valuation on every property annually) and work out your net profit and any capitalisation you have made. Now compare this to your expectations for the property. If the property isn’t performing as you had hoped is there something you can do to maximise the returns of the properties you already own – renovate, add sleep outs, minor dwellings, subdivide etc.
If you have the property working to its maximum and you can’t squeeze anymore money out of it, then perhaps it is time to sell the property and reinvest that money into a property that will perform better. For example, if you bought a house for $100,000 and rented for $200 per week, then when the boom hit the property value rose to $200,000 but still only rented for $200 per week then you would be better selling the property and buying 2 houses at $100,000 renting for $200 per week.
Other things you can do to review your portfolio is to review your expenses. Are you able to negotiate a better deal with your property management company? Can you get a better insurance deal somewhere else? If your LVR has changed, can you go negotiate your interest rates with your lender, I look at what the cheapest competition lender is charging and tell my lender that I want them to give me the same. You would be surprised how well this works. Can you get a better accounting system – a lot of accountants are heading towards Xero which makes it much cheaper and easier for all involved. Can you negotiate with your lawyer? – Remember, don’t just go with the cheapest, go with the best value for your money, but often once you have established a relationship and have given them your custom they will look after you in order to keep you.
By reviewing your portfolio regularly you can detect and stop any problems before they get to bad. Remember that money follows management, the better you manage your portfolio the better your portfolio will repay you.