When considering purchasing an investment property or an investment property loan for the first time, Newcastle & Lake Macquarie buyers want to ensure that they are making the most of their money. Locals who research the market thoroughly, have a long-term strategy and are informed about their finance options will generally find themselves in a good position for property investment.
Keep in mind that understanding their financial goals and deciding on the right strategy to achieve them is key when making any investment decision, including property investment. Buyers should make certain that the investment will improve their financial situation in the long run.
For any Newcastle & Lake Macquarie residents considering investing in property in the near future, following is a list of considerations when mapping out your property investment strategy:
Be realistic about capital gain and rental income – Are your expectations around how much rental income your property will generate realistic to current market trends? Research rents in the local area and factor this into your purchase price and loan amount.
Consider using the equity to purchase an investment property – If you already own property, you may be able to use equity in to buy another one. You can do this by selling a property for more than what you owe on it and using the funds as a deposit or by applying for a home loan against the existing property, using your equity as a deposit.
Carefully weigh up positive vs. negative gearing – Consult with your financial adviser to find out whether positively or negatively gearing a property is of greater benefit to your overall financial position. Investigate the tax and legal implications associated with property investment by talking to a financial planner, accountant or solicitor.
Choosing the right finance – Get the right finance organised early in the plan, or at least get pre-approval, so you know how much you have to play with. A reputable mortgage broker or lender can help you find a loan for your individual circumstances.
Consider interest only vs. principal and interest loans – Although interest-only loans will not reduce the loan amount, monthly repayments will be lower. This will enable you to make greater contributions to your principal place of residence while the investment property grows in value through capital gains.