Like all investments it pays to do your homework before you take the plunge into property investment. But even with uncertainties around interest rates, a sound strategy can pay off. The shortage of rental properties, combined with rising prices in most markets, means that if you choose the right property and make sure you keep a close eye on your investment, you could reap the rewards. Here are 4 property investment tips to help you get the most from your investment:
- Take a long term view
- Choose the right investment property
- Consider positive vs negative gearing
- Consider using existing equity in any other property you own
If you want to find out more, contact your local Arafura Finance Broker to get help in finding the most suitable investment property loan for you.
Why invest in property?
Investment properties have many benefits when building long-term wealth. If you take the time and select your investment properties well – for example, to meet the demands and lifestyle expectations of the changing demographic – property can deliver good returns for long-term investors.
If you are thinking of arranging loans to secure an investment property, consult with one of your local Arafura Finance brokers to secure a suitable loan that will minimize your risk and maximize your return.
Will an investment loan be any different to my existing loan?
There are few differences between what you need to do to borrow for a property you'll live in and for one you'll rent out. Some lenders charge a higher interest rate for investment properties because their risk may be higher. But this may not necessarily be the case.
If you are unsure how an investment loan would potentially impact your financial circumstances, talk to one of your local Arafura Finance brokers and he/she will assess your current financial situation and make recommendations accordingly.
Can I use the equity in my home as a deposit?
If you have owned your own home for a few years, you could have built up quite a bit of equity in your property.
Equity is the value of an asset not subject to any lender’s interest. For example, a property worth $500,000 with a mortgage loan of $150,000 has equity of $350,000. Instead of finding a cash deposit to buy an investment property, you can use this equity as the deposit.
Find out from one of your local Arafura Finance brokers on how you can use your existing equity as a deposit.
What fees and charges should I consider?
When you buy a property, costs such as establishment fees, solicitor fees and stamp duty add up to several thousand dollars. Instead of trying to find cash to pay these fees, take them into account in your borrowings. That means you don't need thousands upon thousands of dollars in savings to get started.
Find out more on how to minimize your cash outlay and consult with one of your local Arafura Finance brokers today.
What’s negative gearing?
A property is negatively geared when the costs of owning it – interest on the loan, bank charges, maintenance, repairs and capital depreciation – exceeds the income it produces. Simply put, your investment must make a loss before you can claim a tax benefit.
Aside from negative gearing, there are a host of other things to consider too for successful property investments. If you want to find out more, talk to one of your local Arafura Finance brokers today.
What’s positive gearing?
You can also positively gear a property. This occurs when the investment income exceeds your interest expense (and other possible deductions). Note that you may be subject to additional tax on any income derived from a positively geared investment.
You should also consider any other costs for successful property investments. If you want to discuss this further, find out more from one of your local Arafura Finance brokers.