Investing in property has proven a hugely successful financial pursuit in recent years, with over 1.8 million Australians currently owning an investment property. Offering a wide range of benefits from a consistent passive income to the several tax benefits you may accrue, property investment is a fantastic method of making your money work for you! However, these investments are only effective when you invest in the property that is right for you.
In choosing your investment property, there are a number of factors you need to keep in mind, and it’s natural for you to think, “is there a mortgage broker near me to help me through this process?”. Thankfully there is, and the team at Greenline Home Loans has devised the following tips to help you make these important financial decisions.
Desired Location
Where you’re a pair of first home buyers or a seasoned investment professional, an absolutely crucial factor to consider is location. When you’re searching for your investment property, you must ensure you select a location that has both tenancy demand to secure the property’s immediate future, and owner-occupier demand to ensure you will be able to sell the property in the future.
A deal-breaker on location is its proximity to transport links to ensure a smooth and easy commute for your tenants, whilst also ensuring that key lifestyle facilities are within arms reach of the property. These may include parks, shopping centres, restaurants and cafes. The closer your investment property is to these key facilities, the higher your rental yield is likely to be.
It’s important to also consider whether the area is likely to provide you with capital growth, as choosing the right location can account for 80% of your property’s capital growth. By investing in a growing locality, most favourably before it is subject to high demand, is a great way to ensure your investment property experiences capital growth throughout the duration of your investment.
Property Type
In searching for your investment property, it’s vital that you consider which property type will suit your budget, but also the demand conditions that the location is likely to be subject to in the future. For instance, investing in an area with an older population may mean that investment into a townhouse property spanning over three levels may not be the wisest investment decision.
By the same token, investing in an area populated by young families of first home buyers and high tenancy demand makes the purchase of a property with ample living space a suitable decision. To maximise the return you receive on your investment, it’s always important to purchase a property that is likely to satisfy the demands of the individuals most likely to reside within the area. Contacting the expert team at Greenline will help you gain a greater understanding of the demographics and demand patterns within your chosen area, and help you determine whether an apartment, house, or townhouse will best suit your expectations and the market demand.
Maintenance Requirements
Once you’ve decided upon the location and type of property you’d like to invest in, you must consider the additional costs and maintenance that will be associated with the occupancy of the property, just as you would if you were moving in yourself. Keep in mind that a home with a large garden and swimming pool will require greater effort and cost in preparing it for tenancy, and by holding greater maintenance requirements, you may be limiting your potential pool of tenants.
Similarly, an apartment situated in a luxurious complex with multiple, high-quality communal amenities will result in higher strata fees, and these expenses must be covered by the property owner rather than the tenant. This would limit your potential return and subject you to high recurring financial costs. Generally, investment into properties with minimal maintenance requirements and ongoing costs makes for a sound investment decision that will maximise your return.
Why Choose Greenline For Your Investment Property Home Loans?
Before you invest in a property, it’s crucial that you contact an expert team of lending professionals who can offer you individualised, specialist advice on your investment. If you require an investment property home loan to help finance the purchase of your additional property, look no further than Greenline, as we offer the lower rates on these all-important home loans, helping you secure your financial future with minimal hassle.
With many lenders in the market offering their services, it can be difficult to know which company is right for you. However, if you’d like to invest in property but you’re in need of expert advice from a company that will make the process easy to understand and reduce your stress, a simple search for a “mortgage broker near me” will direct you to our devoted team of professionals.
Reach out to Greenline Home Loans today!
Whether you’re looking to purchase an investment property, require information on home loans, or you’re first home buyers looking for expert advice, get in touch with our team of experienced brokers at Greenline Home Loans. With access to 50 lenders and a strong relationship with several major banks, we’re always able to assist you and offer a customised solution that will meet your needs.
At Greenline Home Loans, we will tailor the best solution for your requirements, and take you through the entire process from the first day you consider a construction loan or small business loan. Contact our friendly team of brokers to speak about low-rate home loans on 1800 705 505 to get started today!
Why Is Leveraging In Property Lucrative?
Financial leverage refers to borrowing money in order to achieve bigger property growth and investment. It allows an investor to place more money into purchasing an asset than they otherwise would have been able to. Ultimately, this creates the possibility for increased gains.
The bounds for using leverage is that by obtaining serval sources of capital, an investor is able to enhance the prospective return generated on their equity and unlock deals at a scale otherwise inaccessible due to capital constraints.
So how does leveraging in property work?
If you are a first home buyer and you have, for example, applied for a loan of $250,000, you can use this money to purchase an apartment outright. You would then obtain a strong cash flow that an unmortgaged investment would bring in due course. On the other hand, you could use this money to place a deposit on five separate apartments. Presuming that these properties that you purchased were bought in a prime location with the potential for growth and had neutral to positive cash flow, all of these five properties would admirably be looking after themselves in regard to cash flow while also increasing in value in the long term.
Benefits Of Leveraging In Property For A First Home Buyer
- You Get More For Less
In instances where you place all your cash into one investment property, that is it. Whereas, in cases where you leverage in property, you have the option to go for another property. You have the ability to obtain extra mortgages meaning you are able to own several properties. Assuming that each of these properties is acquiring reasonable returns, this would transcribe to more rental income and real estate wealth on your behalf.
- Less Risky
The power of leveraging in property lowers your risk. If you use all of your cash to obtain only one property investment and it does not perform well, it can result in a bad investment decision, and you will be left with nothing. Contrastingly, if you obtain several leveraged properties, you will still be acquiring income in the chance that one or two of your properties perform poorly.
- Tax Benefits
On the occasion that one of your tenants decides to relocate, you will be left to offset the expenses that go along with it. You will certainly be making negative cash flow, but with many investment properties in your portfolio, you will be able to make up this income from the rest of your investments in order to offset such expenses.
Be Smart With Leveraging & Minimise Risk
In order to get the most out of your investment, you should be highly meticulous in minimising your risk and maximising your investment. Here are some tips that investors should follow when leveraging in property.
- Purchase in metro areas where there is a demand for renters and a chance that properties are able to retain their value
- Purchase properties that have a potential for growth
- Buy properties that have a strong yield where they are able to pay themselves off
- Stay away from high-risk investment properties
- Have an exit strategy in place – if you had to sell quickly, would you be able to get your money back?
- Protect yourself against any unexpected costs – an adequate buffer in place, such as 2 months’ worth of rent
- Get a payment you will be able to live with – find a balance between your down payment and your monthly payments
- Be conservative in your appreciation expectation
How Can I Start Leveraging In Property Now?
Our mortgage brokers here at Greenline Home Loans are able to help you with the process of leveraging in property. When it comes to leverage, it is important that you have a clear and precise process and plan in place to figure out how you are going to set out your finances. If you plan on purchasing two investment properties, it is important that you have enough equity that allows you to cover the costs of the deposit, stamp duty as well as the buyer’s agent fees for both purchases.
Reach out to Greenline Home Loans today!
If you are a first home buyer, buying a residential property or wanting an interest-only residential home loan, get in touch with our team of experienced brokers at Greenline Home Loans. We have access to 50 lenders and a strong relationship with several major banks to assist you and offer a solution to suit your needs.
At Greenline Home Loans, we will tailor the best solution for your needs and walk with you hand in hand from the first day you consider leveraging a property. Contact our friendly team of brokers to speak about low-rate home loans on 1800 705 505 to get started today!
Currently over 1.8 million Australians own an investment property and one of the main reasons is for the tax benefits they provide! An investment property is a real estate property which is purchased for the purpose of earning an income through the property in a range of ways which may include through renters or through resale of the property in the future.
Buying a commercial or residential property as an investment property is an exciting time – although to make the most of it it is important to understand the ins and outs of an investment property to make the most of tax benefits and other benefits available.
Benefits Of Making Investments In Properties
There are many benefits of investment properties with the main benefit being tax related. Many property-related expenses are tax deductible, which may include maintenance costs or fees paid on your residential or commercial loans.
Some key benefits of investment properties include:
– Rental Income
– Capital growth
– Tax advantages
– Negative Gearing
Having rental income from your tenants is a great way to ensure you have a regular income which is beneficial for cashflow. Landlords can claim a variety of costs including property maintenance costs, council rates, pest control, garden maintenance, agent fees, strata fees, land tax, advertising costs to find a tenant and more.
The main tax benefits and advantages which come with owning an investment property which is a rental property is that you can offset any losses on the rental property against your assessable income. It is possible to pay less tax overtime if the income you receive from the property is less than the expenses associated with owning the property as these costs will be deducted from the owner’s income.
Negative gearing is something to take into consideration when you have an investment property. Negative gearing refers to when the income from the property is less than the rental return, interest, or other related property costs. This can reduce your overall taxable income, meaning that you are reducing the amount of tax you may need to pay – overall saving money in the long run.
Claiming for depreciation on a negatively geared property can result in an improved tax position. This is due to when you claim for depreciation this can increase the overall loss of the investment property which can then be claimed as a tax deduction against personal income. Due to this, there will be a decrease in the investors tax liability and lead to a higher tax refund.
Reach out to the friendly team at Greenline Home Loans who can assist you with commercial property loans, accessing the best home loans, or a construction loan where the real estate property can then be used as an investment property for you to reap the benefits for.
Top 3 Mistakes To Avoid When Investing In Properties
To get the most out of your investment property it is best to understand your goals and financial situation. Here are some tips for 3 mistakes to avoid when considering an investment property:
1. Not conducting enough research
It is important to carry out sufficient research before acquiring a loan or buying a property which you are intending on becoming an investment property. It is important to research the location of the property you are wanting, the possible zoning requirements in the area you are interested in, the needs and requirements of possible tenants for your property, the condition of the property and more.
Ensuring you have undertaken sufficient research will ensure that you are well-informed about the property you are building or buying and are able to make the decisions based on factual evidence.
2. Not having a plan or strategy in place
It is always beneficial to have a plan or strategy in place regarding your investment property. Real estate can appreciate in value, although time is needed for this to happen. Generally, the longer you are in the market, the higher your capital gains will be. Therefore, it is important to set a plan for if you are planning to invest long-term.
3. Not calculating finances effectively
It is important to ensure the property you are building, or buying is a good financial decision for you long-term. Ensuring you can afford the payments required and maintenance costs by setting aside money or creating an emergency fund can limit financial hardship which may occur.
Speak to the friendly team at Greenline Home Loans who are able to assist with commercial property loans, the best home loans available or construction loans to begin with when you are considering an investment property.
Reach out to Greenline Home Loans today!
If you have been considering buying your first home, buying a residential property or wanting an interest-only residential home loan, get in touch with our team of experienced brokers at Greenline Home Loans. We have access to 50 lenders and a strong relationship with several major banks to assist you and offer a solution to suit your needs.
At Greenline Home Loans, we will tailor the best solution for your needs and walk with you hand in hand from the first day you consider a construction loan or small business loan. Contact our friendly team of brokers to speak about low-rate home loans on 1800 705 505 to get started today!