The first question you may be asking yourself is “Why would I want an investment property?”
This is simple, relying on superannuation and the age pension were once suitable retirement options, with the cost of living increasing and an aging population means we now need to be more self-sufficient and having a retirement plan should be a MUST!
In saying that, investment properties can hold less risks than shares or other investments. Keeping in mind there are other costs associated to buying an investment property, it is still a reliable source of income. Ongoing rental income is a great contributor to paying off your mortgage, and come retirement there is a good chance your loan will be paid out.
Investment properties are a tangible asset, and in addition to rental income, you can benefit from capital growth. Meaning if your property increases in value, you will profit should you sell. If you want to hold onto it, this just frees up more equity to buy another investment.
Unlike complex investments and shares you don’t need any specialised knowledge to invest in property – although it is always recommended to do your research as with any purchase.
Ok, Now you want to buy an investment property. How?
Smart investors can absolutely buy properties with little or no deposit.
Equity is one of the most powerful tools you have to start building a solid property portfolio.
Many homeowners may believe that they need to pay off their current mortgage before they can start investing in property. Even if you have only purchased a home in the past 12months, with the property market strong, you may already have enough equity to use as a deposit to purchase an investment property.
What is Equity?
Home equity is the difference between the home’s fair market value and the outstanding balance of what is owing on the property i.e Mortgage.
Keep in mind to leave at least a 10% buffer here.
How to buy an investment property using Equity?
You can use equity in your property as a deposit against an investment property loan. If you do have enough equity, you can borrow up to 80% of the investment property value without using any of your own cash. Therefore the mortgage itself will be against the purchased investment property and you can start your investor journey. If you find a property with a good rental yield you could be contributing minimal payments towards a wealthier retirement or portfolio for your children.
When it comes to buying an investment property, it can be hard to know where to begin. It is important to understand how investing in property works, to decide if it’s right for you.
There are a number of home owners out there that are looking to get into the investor circle, and don’t realise that they have been able to the whole time. Are you one of these home owners? It’s easy for you to find out & contact us and we let you know if you can or, what you need to do to reach your investment property goals. Contact our Nectar Home Loans | Hunter office on (02) 4040 0910, or alternatively you can email firstname.lastname@example.org to discuss further.
Don’t worry we aren’t here to charge you for advice, it’s FREE to chat us. (other than the standard cost of your call of course)