Is becoming a property investor next on your to do list? Whether you're already on the property ladder or looking to become a rent-vestor, I've listed out the points I ask my customers to consider before becomimg an investor.
Before you start, it's very important to understand whether you're looking for capital growth or high rental yield. If you're looking for capital growth, you need to own an investment property for at least 10 years. Most properties will increase in value in that time. If you're looking for high rental yield, the property needs to generate at least 5% of the property's value in rental income each year. Do your research to check property prices and rents will give you the yield you're looking for.
You also need to have an idea of how long you plan to own the property. You generally need to own a property for at least 5 years to avoid making a loss. If you sell before 5 years ticks over, the cost of buying and selling may mean you make a loss.
Do your figures. You need to understand how much it will cost to purchase the property, how much your loan repayments will be, rental income and other expenses. How much will you have left at the end of the month? When you have worked this out, you'll minimise risk by understanding what you can afford. This is something a good mortgage broker will do for you.
A good mortgage broker can be an invaluable resource for a beginner investor. They have access to a wide range of mortgage and property information to help you. They can help you calculate how much you can borrow, give you advice on what type of loan suits you and how to structure it so you pay it off as quickly as possible and can continue borrowing money down the line. Make sure you choose a broker who understands property investing.
A good accountant will be able to structure your tax affairs so that you can use your investment to maximise tax deductions and cash flow. They can help you structure your investments so that you can minimise your tax bills while protecting your property investment and yourself. Just like choosing a mortgage broker, make sure your accountant specialises in property investing.
Have a game plan, identify the areas in which you would like to invest and stick with the plan. Once you have a clearer picture of what you want to achieve, you'll be able to make the best possible decisions.
If you would like to know how much you can borrow to invest, call me on 0487344352 for an obligation free assessment.
"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"