Data from Mortgage Choice's annual Investor Survey found more Australians believe now is the perfect time to buy an investment property than ever before.
As per the survey findings, 74% of respondents thought now was a good time to invest – up from 71% in 2015.
With interest rates sitting at record lows, and property prices continuing to rise month after month, it is little wonder why so many Australians feel optimistic and confident about property investment.
But while the current market conditions have made now a great time to be a property investor, there are some important steps that all potential investors need to take before heading down this path, including:
Step 1: Do your research
Before buying an investment property, it is important to do your research and get a good understanding of the current property market. In your research, look for suburbs that perform better than others in terms of rental yields and capital growth.
At the end of the day, when buying an investment property, location is everything. If your property is not close to transport, shops and other amenities for example, it may be hard to find tenants for the dwelling.
Step 2: Factor in all costs
When you buy an investment property, you shouldn't enter into the arrangement expecting to make money. Understand the cost of the mortgage and ask yourself whether or not you can afford it without any rental assistance. In addition, it is important to factor in repairs and maintenance fees as well as other costs including water bills, strata management fees etc and make sure you can comfortably afford all of these costs. Keep in mind that the interest and related expenses you incur (such as repairs and maintenance) are tax deductible. If your loan interest, fees and other costs exceed your rental income, the net loss can be offset against other income you derive, meaning you will be able to reduce the amount of tax payable on your other income.
Step 3: Choose the right loan
As a property investor, having the right loan and the right loan structure is essential. What loan structure and loan is right for you, will depend on your monetary situation and current investment portfolio. Ask yourself: Will you go with an interest only or a principal and interest loan? Fixed or variable rate? Which features will you need?
Contact your local mortgage broker, who can help you find a loan that is right for your needs and structure the loan so that it continues to meet your needs into the future.