Expert Accountant Explains: How To Maximise Your Property Margins with Josh Keegan
Last updated: 2 Oct 2024
Meet Josh Keegan
In this episode of Deal Finder's Corner, Josh Keegan, a chartered accountant and property entrepreneur, shared essential strategies to help property investors increase profitability and scale their portfolios. Josh has a wealth of experience, having built and sold multiple successful businesses. He’s known for combining financial discipline with entrepreneurial insights, which makes him the perfect guest to guide property investors toward financial independence.
"Success isn’t just about finding good deals; it’s about structuring your property business to generate consistent and long-term profitability."
The purpose of this article is to delve into the practical steps property investors can take to ensure their deals not only make money in the short term but also create lasting value over the years. Josh provided actionable frameworks to increase profitability, manage cash flow, and avoid common mistakes that experienced investors often face.
Key strategies
The importance of measuring financial performance
Josh emphasised that tracking financial performance is crucial for any property investor. He shared the key sentiment: "If you cannot measure it, you cannot improve it." By having clear visibility over your profits and expenses through tools like profit and loss (P&L) reports and cash flow forecasting, you can make informed decisions and avoid hidden losses.
Avoiding the trap of unprofitable deals
One of the critical challenges property investors face is jumping into deals that seem attractive but are not financially sound. Josh warned against the temptation to rush into deals without proper financial analysis, likening it to being "so hungry for deals that you end up eating junk." He stressed that many investors make the mistake of prioritising quantity over quality, leading to portfolios that struggle to generate significant returns.
Actionable tips from Josh Keegan
Use financial tools to gain clarity
Josh recommended using accounting software like Xero to track expenses and profits by property. This enables investors to have a clear understanding of how each property performs financially. He also encouraged delegating bookkeeping and financial management to professionals: "Don’t do it yourself—it’s above and beneath you." By outsourcing these tasks, investors can focus on growing their portfolios while ensuring financial accuracy.
Build a team of professionals
Another key takeaway from Josh’s session was the importance of building a reliable team. From a finance assistant to a tax accountant, having the right professionals in place ensures that you are on top of your finances and ready to handle any challenges. As Josh pointed out, "Business is a team sport," and having the right team can make or break your financial success.
Manage cash flow effectively
Managing cash is vital to running a successful property portfolio. Josh highlighted the risks of overleveraging and running out of cash during critical stages of a property deal. By implementing what he calls the "Master Cash Manager" system, investors can project their cash flow over the next 12 months and plan for upcoming expenses or income shortfalls.
Common mistakes to avoid
Holding properties for too long
Josh cautioned investors against holding onto underperforming properties for too long due to emotional attachment. He explained that it’s better to sell a property that isn’t generating profits than to hold onto it and let it drain your resources. His advice: "Don’t be afraid to let go of deals that aren’t working."
Neglecting cash flow management
A significant mistake Josh has observed in experienced investors is neglecting cash flow management. He warned that failing to forecast and plan for future cash needs can lead to financial distress, even if your property portfolio looks healthy on paper.
Conclusion
Josh Keegan’s session was packed with practical advice on scaling property portfolios while maximising profitability. He emphasised the importance of regularly measuring financial performance to enhance profitability, focusing on quality deals rather than chasing quantity, and building a strong team of finance professionals for efficient portfolio management. Additionally, Josh highlighted the need to maintain a clear understanding of cash flow and to avoid overleveraging. For more insights into Josh Keegan’s approach to property investing, you can check out the full episode on YouTube.
