With Australian real estate delivering impressive returns over the past few years, investing in property can represent a solid long-term financial plan.
Planning for success
A personal mortgage broker can help you get the most out of your investment property
Like all wealth creation strategies, successful property investment requires the appropriate planning, market research and financing. And the right support.
A Choice Home Loans broker can help you assess your current financial situation, including what you can realistically afford to spend, and provide guidance on what you should be looking for as an investment.
Often first time investors assume they’ll need a deposit to buy an investment property, but many banks let you use the equity in your own home to secure the entire cost of purchasing your investment property.
If you’re after a cash positive investment that provides high rental returns, you’ll need to focus on specific segments of the property market. If strong capital growth is your priority, you’ll need to focus on areas that offer the greatest potential for price growth over the coming years.
For some, an interest-only loan could be the most effective strategy at certain stages of their investment strategy. For others, a principal and interest loan may be better suited. While a line of credit loan might give some investors the flexibility to move quickly, for others it may become a liability.
Your Choice Home Loans broker will help you define the best strategy for you, guiding you on where to buy, and how best to invest. We’ll make the process as simple as possible for you and take the hard work out of the administration. And most importantly, we’ll help you negotiate your property deal over the line.
Determine your borrowing capacity and purchasing power, based on your current equity
Actively listen to your personal needs to help you develop a robust investment strategy
Guide you through a comparison of hundreds of home loan options from an extensive range of lenders, including the big banks, non-bank lenders and specialist lenders
Discuss the benefits and features of the products most suited to you
Structure your next home loan to meet your specific needs as an investor
Make the process of paperwork fast and easy
Offer trusted, experienced advice every step of the way
Free up more of your time to spend on finding your next investment property.
The smart way to invest in property
Historically, Australian house prices have tended to double every seven to ten years, with location being one of the greatest influencers on long-term growth.
Proximity to amenities such as transport, schools, hospitals and shopping centres boosts potential for capital growth. Economic variables such as local employment figures and population growth, as well as future developments such as new industry, also influence local demand for property.
If you want a cash flow from your investment, look for a property with a rental return that is more than the cost of the home loan and the costs of maintaining the property. The ‘rental yield' of a property is the rental income you can make from that property as a percentage of the total value of the property. Properties with a higher ‘rental yield’ will get you closer to getting a cash flow from your investment.
Inner city units or apartments can offer investors good returns. In the right location, apartments are in high demand, which can lead to solid rental value growth. Houses in some suburban locations can also offer great cash flow opportunities. Typically, less expensive houses, closer to key employment centres, offer high rental returns for investors.
The vacancy rate of the local market will affect your investment’s potential rental return. Be sure to buy a home or unit in an area that traditionally has a low rental vacancy rate to make sure your property remains in demand.
Investing in commercial property
Residential and commercial properties are attractive investment opportunities. It’s important to know how residential and commercial rentals differ so you can decide what’s appropriate for you.
Consider your short and long-term investment goals, your deposit situation and whether a short or long term lease arrangement suits you best.
Commercial tenancy or lease periods are usually longer than residential ones, with agreements often lasting several years. This offers good income security for investors, but may mean less flexibility.
A commercial tenant is generally responsible for all maintenance costs, rates and repairs to the property. It is the landlord of a residential property who is typically responsible for property maintenance.
Commercial investments generally have higher deposit requirements. Where residential deposits are usually 10-20 per cent, commercial deposits can be up to 30%.