As you have seen through our previous articles, property investment is not always straightforward. If you want to be a successful investor and create true generational wealth, you need to work with a team who understands all of the “tricks and tools” to ensure you get the best outcome for your portfolio. I would always love to write exciting articles about the “fun” side of investments and property, but sometimes we also need to look at the less exciting parts, but they are still vitally important.

Fair Value Adjustment: The Market’s Truth Serum

Let’s talk a little about Fair Value (FV), which you can view as the truth serum of the market. In a nutshell, it is the fair and unbiased estimate of an investment’s potential market price. FV considers all the objective factors related to production, replacement market conditions, and supply and demand dynamics. Think of it as a trusty assistant that reveals the real value of your investments – which will help you to ensure that your property portfolio values are always reflecting as accurately as possible. This is important for your accounting purposes to always ensure you show your property’s most accurate value.

Some people tend to forget this, but it is so important to always review the value of your property, just like any other investment. Knowing the market value of your property will ensure that you are always ready to refinance a property that has generated sufficient capital growth; otherwise, you have a golden goose and you aren’t allowing it to lay any eggs – what a waste!

Impairment Expenses: Guardians of Your Investment’s Value

Impairment losses in property investment are like the “ouch” moments when the value of your property takes a hit. Imagine your once-awesome property losing its sparkle due to things like physical damage or a market that suddenly goes haywire. These losses happen when the property’s worth (the fancy term is “carrying amount”) becomes less than what it can fetch you in the real world (“recoverable amount”). To calculate the impairment loss, you subtract the carrying amount from the recoverable amount. It’s like realising your property’s value has dipped, and you need to adjust your financial statements accordingly. So, impairment losses are those pesky reminders that property values can sometimes go down, and we have to face the music and account for it.

Understanding impairment losses is crucial for property investors as it helps them maintain financial accuracy, assess risks, evaluate performance, adjust strategies, and meet compliance requirements. It empowers investors to make informed decisions and navigate the complex world of property investment more effectively.

Conclusion:

Fair Value Adjustment and Impairment Expenses are the special tools you need in the captivating realm of investments. Embrace these tools and unlock the secrets of the financial landscape. But remember, you don’t need to navigate these complex things alone. If you join our Family Membership, you instantly have a team of experts in your pocket who will help you, and guide you through the intricacies.

If you want to know more about our methods, or if you want access to the benefit of the Family Membership, then book for our next upcoming event in your city (we are still limiting our numbers) and let us help you unlock the investment potential and help you see the light