Once you have purchased your own home and built up some equity, you may catch the investing bug and want to purchase your next property as an investment. It may be exciting, but daunting at the same time.
So, what can you do to make the process a little easier and give yourself the best chance of successfully starting an investment portfolio?
Find properties below market value
This will take a little more research, but it could pay off in the long run. There are a number of properties that sell for below value, you just need to find them. Some vendors are in a hurry to sell and if you get in early, you may be able to negotiate the price down. Build relationships with local real estate agents and they may be able to inform you about up and coming properties. If you buy properties below market value, you won’t be so reliant on the market going up in order to make a profit. Also if it commands a good rent you might get close to it being cash flow positive.
Do you have enough money?
This is one of the first things you should determine. Are you financially stable? Do you have equity or savings to pay the deposit? How much will you need to contribute for repayments and maintenance on top of the rent income? Another mortgage will have a significant impact on your cash flow, so do the calculations on a worst case scenario of the property being vacant for a few months. A lending specialist will be able to help get you started on these calculations providing a valuable framework for you to work with.
Add value to your property
If you need to access equity in your existing property to help purchase another property, why not do those improvements you have been putting off? The higher the valuation, the more equity you will have to work with to help fund your new property.
Find the right home loan
Finding a competitive home loan with the features you need can make all the difference and it is not hard to do. Use comparison sites to give you a list of lenders to research. The type of home loan you get should reflect your investment goals. For example, an interest only loan will have the lowest repayments if cash flow is tight. Principle and interest repayments will be higher but will help build equity by paying it off. Your strategy will depend on your own situation so if in doubt get financial advice.
State Custodians has a broad range of home loan options for investors. Our experienced Lending Specialists can help you do the calculations to find out if an investment property is an option for you. To speak to a Lending Specialist now call 13 72 62 or leave your details here and they will contact you.