When it comes to investing in property, numbers are everything and if you are in it for the long run you’ll want to make sure you get it right from the start.
Dealing with the range of banks and their different policies changing every week can be confusing even for experienced investors. Getting your finance sorted means you can focus on identifying the right opportunities – and it can help to create more.
Start With Strategy
Before rushing in just because everyone else is doing it ask yourself what you want to achieve by investing in property? For most people property investment is a long term game where you can set yourself up with an income for retirement.
Take a step back and work out what that looks like – a passive income of $100,000/year may only mean holding three mortgage-free properties in retirement. Once you know where you want to go you can then look at how to get there.
How the right structure means bigger returns
If you have all your lending with one bank you give them total control of your finances. They determine how much you have to repay when you sell a property. You might not have enough deposit for your next investment because they changed the rules. It can even be hard to top-up for a new roof or essential maintenance.
By structuring your lending in a smart way it means you take control back over your property portfolio.
Options like revolving, interest only and offset accounts can ensure you maintain flexibility with your mortgage as well as maximising your return with tax advantages.
What the Reserve Bank Doesn’t Want You to Know
Going through a bank means putting down 40%. But there are ways to buy an investment with no deposit if you’re already a property owner – or with just 20% if your first purchase is a rental property.
Your Home Loan gives you access to the big four banks as well as another dozen lenders – so you can start building your portfolio without 40% up front.