5 Key considerations for property investment

5 Key consideration for property investment

Thinking about starting your investment property journey? here are 5 things to consider

Why do you want to invest in property? It’s crucial to have clear goals and understand the timeframe and property cycle you’re in. Are you seeking an investment that offers steady rental income and allows you to accumulate equity as you pay down your loan for long-term capital growth? Or perhaps you’re interested in properties with opportunities to expand your investment portfolio, such as subdivide and increase income and capital growth. Remember, property investment is a long-term journey, so tailor your goals accordingly.

Costs: It’s vital to consider more than just the mortgage expenses. These costs encompass:

  • Tax
  • Council rates, Insurance
  • Maintenance and repair expenses
  • Property management fees
  • Legal and accounting fees

Having a well-defined strategy for handling these expenses, especially during periods when your property might be vacant, is essential. Crunching the numbers to assess the continued feasibility of your cash flow is a crucial step in your investment property journey. To achieve your financial goals, consider using budgeting tools like the Sorted budgeting tool. Planning and managing your finances through a well-structured budget can be a key driver for your investment success.

Returns: Consider factors such as the gross and net rental yield, long-term capital growth prospects, and opportunities for activities like subdividing. Your choice of property should align with your investment goals and your ability to manage debt and associated stress effectively. A well-informed evaluation of returns will guide you in selecting the right property that matches your investment aspirations.

A 35% down payment is the typical requirement for investment property loans. However, lower-deposit may also be viable. These options include leveraging your existing property’s equity or considering the purchase of a new build.

When teaming up with family or friends for a joint investment, seek legal advice. Consider worst-case scenarios like needing to sell due to personal financial goals or market downturns. Plan ahead for success.

Ensure that your cash flow can not only withstand the impact of rising interest rates but also, in addition, handle periods of vacancy. By leaving sufficient room for unexpected costs, you’ll be much better prepared to effectively navigate the potential challenges that may arise during your investment property journey.

Mortgage Adviser’s Role: Collaborating with a Mortgage Adviser is essential. They help define your investment goals, assess your financial capacity, and determine mortgage eligibility based on your circumstances. This process help you understand your purchasing power i.e. property price range and effective teamwork with other experts for investment success.

Here’s the golden rule for property investing: seek professional advice. Talk to a chartered accountant to understand the tax implications, interest deductibility, Bright-line test, ownership structures, and other financial aspects. Work closely with a solicitor to protect your interests during the purchase. And if you’re thinking about subdivision, consult experts like surveyors, builders, and architects to make well-informed decisions.

Contact Achiva to navigate your investment property lending journey

At Achiva, our experienced mortgage advisers are here to guide you through your mortgage journey. We’ll help you turn your possibilities into achievements. Contact us today to discuss your investment property loan needs.

Remember, your investment journey can be a success when you collaborate with industry professionals and seek expert advice. Happy investing!

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