Research Before You Buy And Know Your Market
Before you purchase an investment property, research the market and seek professional advice. Here are some other things to consider that we can help you with:
- Know where the market sits within the property cycle. This gives you a better chance of finding a property at the right price.
- Find a property that’s close to local amenities such as schools, public transport, parks, restaurants and cafes.
- Look for areas experiencing population growth as this will increase demand for your property both with tenants and prospective buyers.
- Search for a property that works for your investment strategy.
- Research current sale prices against historical sale prices to get an idea of growth.
- With our help as your mortgage broker, find the loan that fits your goals and lifestyle
What Is Negative Gearing And How Does It Work?
There are three types of gearing strategies:
- Positive gearing is when your rental return from tenants is higher than your interest repayments and outgoings. This is considered a positive cash-flow strategy.
- Negative gearing is when your rental return is less than your interest repayments and other outgoings. This is considered a tax-minimisation strategy – as any losses are usually tax deductible.
- Neutral gearing is when you earn the same amount from your investment property as you pay in interest and other outgoings.
Check the video and know why negative gearing is a popular strategy.
Property Investment Strategies
When borrowing for an investment property, it’s important to consider your budget and cashflow, including some margin for any unexpected expenses or interest rate rises. Once you’ve covered all the bases, it’s relatively straightforward. Your property’s value should gradually increase and generate equity in the coming years.
- Use equity to buy your investment property
- Buy an investment property through a superannuation fund
- Buy, renovate and sell (also known as “flipping”)
Things To Consider Why Are You Investing
Where and when you buy an investment property depends on multiple personal and market factors. When it comes to understanding the market, it’s important to realise the housing market can be complex and requires a lot of research before you make your move.
- What might the return on your investment be?
- What are the costs of buying and selling?
- What costs are associated with borrowing the money?
- What is the rental potential or future capital gain potential of the property?
Understanding Home Loan Costs
The actual costs involved with taking out a home loan will depend on the kind of loan you need and the lender you choose. Fees and charges can vary widely from lender to lender. Here are a few fees to consider.
- Loan application fee
- Ongoing fees
- Early exit fee
- Lenders mortgage insurance (LMI)
- Stamp duty
- Legal representation
How Else Can A Mortgage Broker Help
We’re here for the long-term with whatever help you need. We can help you manage and stay on top of your home loan, as well as find ways to maximise your income and available credit to build wealth for your future.
- Future property investment
- Asset finance
- Industry updates
Four Reasons To Choose A Mortgage Broker Over A Bank
Why choose a Mortgage Broker over a Bank?
- Brokers assist you during the entire mortgage application process.
- We protect your interests and help to reduce the incidence of declined loan applications.
- Brokers are not aligned to any one particular bank.
- Brokers are well practiced in finding the right loan products and most competitive rates. We know lenders’ credit policies and are able to direct you to lenders most suited to your circumstances.
Tips For Future Investment
Once you begin to receive regular income and your investment property begins paying for itself, you may consider adding to your portfolio. Here are some tips for setting yourself up to make future investments.
- Use the equity in existing property
- Mortgage offset account
- Save your annual lump sum payment and windfalls
- Save a little extra every month
- If interest rates drop
- Stay informed
Costs Of Owning An Investment Property
Owning an investment property comes with ongoing costs making sure you understand what these are because they affect your budget and your overall net profit. While some of these expenses can be claimed back in tax– not all of them can.
Here’s a list of ongoing costs:
- Council and Government Taxes
- Body Corporate Fees
- Property Compliance
- Property Management Fees
- Repairs and Maintenance Costs
Questions To Ask Potential Property Managers
When choosing a property manager, it’s important to find a company that knows the local area and has connections with good tradesmen in case of an emergency. You need to feel confident that one of your biggest assets is in good hands.
- Do I choose the tenant or do you?
- What happens if I want to sell my property?
- Who pays for maintenance? Is it included in the fees?
- How do we agree on a rental price?
- How do I know my property will be looked after?
- Do you carry out regular inspections?
- What happens if a tenant doesn’t pay their rent?
- What happens if a tenant damages my property?
- Cost of using a property manager?
Buying The Right Investment Property
Before you invest in any property there are some key factors to consider.
- What do you want to achieve?
- Are you looking for rental yield, capital growth, or both?
- Is this your first, second or 10th investment?
- Think strategically about your investment
- Are you looking to maximise your returns?
- The type of property
- Look for a property in a area with strong rental demand
A loan pre-approval provides you with proof that a lender considers you eligible to borrow a certain amount. With pre-approval you can bid and negotiate with confidence.
- Evidence of your deposit, which ideally should be at least 10% of what you want to borrow
- A budget showing your regular expenditure. This is called your living expenses assessment and must be very accurate. We’ll work with you to put this together for the lender
- Evidence of your savings history
- Last 2 payslips for each person and last group certificates
- Statements for all debts
Making Your Decision On Investing In Property
When considering making a significant investment, you need to consider the pros and cons before making your decision.
- Safe investment
- Rental income
- Capital growth
- Minimise risk
- Anyone can invest in property
- You’re in control
- Tax benefits
- Rent-free period
- Ongoing costs
What’s The Difference Between A Bank And A Mortgage Broker
Not sure what the difference is between a Bank & a Mortgage Broker?
- A bank only has access to their own loan products and interest rates.
- Mortgage brokers have access to a wide variety of lenders with competitive rates—including the “Big 4” Australian banks, second tier lenders, and credit unions.
- With a mortgage broker you get personalised, ongoing service from someone you know and trust. We’re here to help you for the long term.
Looking To Purchase? Key Questions To Ask A Real Estate Agent
When viewing a property, you should not be afraid to ask the real estate agent questions. Here are some important questions that you might consider asking.
- Is it insulated?
- Are there any planned construction works in neighbouring lots?
- What are council rates like?
- Does the property have any special restrictions?
- Are there potential zoning changes in the future?
If the property is a unit or apartment:
- Are pets allowed in common areas?
- What are the strata fees?
- Are barbecues or other outdoor events allowed at the property?
- Is there car parking at the building?