Looking to jump into property investment? When investing for the first time, it’s easy to get a little overwhelmed with everything you need to consider. “What type of property should I go for? What locations should I consider? How do I go about financing the purchase?” If this sounds like you and you're not quite sure how to go about financing your investment, the following tips are sure to help get you moving in the right direction:
One of the primary benefits of property investment is the likelihood that your property will increase in value over time. Although you might see marginal drops, property is one of the more stable ways to invest in the long run as it has very low potential for decreasing in value. Another advantage to property investment is the consistent rental return. Everyone loves getting a little something in return so having regular rental income coming your way is a massive plus for property. This is also true for your tax; as a property investor, many expenses related to your property are tax deductible – another great reason to consider investment opportunities.
WHAT TO LOOK FOR IN AN INVESTMENT PROPERTY
Rather than jumping at the first house you find, try shopping around for a better deal. Maybe the location you're interested in is a little pricey but an upcoming suburb nearby is more affordable and likely to increase in value in the near future. You may also want to have a look at areas with a high rental yield; if the rental rate is high compared with the property value, this means the property has a high rental yield and is a more desirable purchase for obvious reasons.
Another alternative is to look for an investment property that is lower in price due to necessary upgrades or renovations. Spending a little time and care on finishing touches can substantially increase a property's value and can mean something as small as a fresh coat of paint, revamping the yard or enhancing kitchen or bathroom fixtures. In short, don't be blinded by a property's minor flaws - a little TLC and patience can save you big dollars and bring about a better ROI in the long run.
If you've owned your home for a few years, it's likely that you've built up a decent amount of equity which can become extremely useful when looking to add an investment property to your portfolio. So how does it work? Your home equity is the difference between your property's market value and the balance of your mortgage. Say your property is worth $750,000 and you've paid off $250,000 - this figure is your home equity. As an investor with a reputable credit history, you can generally access up to 80% of this amount for your next deposit without forking out for lender's insurance. For those whose equity isn't quite as high, you may need to contribute some extra funds to ensure your deposit is up to scratch - however, in combination with the equity you do have as collateral, getting into that new property becomes that much easier. Not sure how much equity you have accumulated? A reputable broker such as George Cremona from Mortgage Choice Wynnum is more than capable of running you through these figures, as well as helping you to decide whether using your equity is the best option for your circumstances.
REFINANCE YOUR EXISTING MORTGAGE
Refinancing your current mortgage is another option to consider when you're looking to take that next step in your property journey. By shopping around for a better rate or refinancing to gain access to your equity, you could find yourself saving enough interest to afford that investment you've been dreaming of. Whatever stage you're at, reviewing your mortgage is always a good idea to ensure your loan aligns with your needs and ideal budget. By approaching a credible broker like George Cremona at Mortgage Choice, you can be confident that you're in the right hands to get the best deal for you.
For more information or to discuss your options with a local mortgage guru, contact George Cremona today at Mortgage Choice Wynnum – 07 3393 6200