24/12/2024
When preparing to buy an investment property it’s important to get the financial foundations right first, including working out how much you can spend, so you don’t end up over-committing to a property that puts pressure on your budget.
These five steps can help you get your foot on the investment property ladder.
✅Step 1: Get your deposit ready
Most lenders require a minimum deposit of 20% of the property's purchase price with Self-Managed Super Fund investment (this can vary between residential and commercial purchase).
In addition to the deposit, you’ll also need to budget for the other cost of owning an investment property like stamp duty, lender Fees and Charges etc.
✅Step 2: Decide your investment strategy
Work out what you want to achieve from your investment property.
Do you want a property that generates a high income and is profitable from day one?
Or are you comfortable funding a small shortfall every month, with a long-term goal of paying down the debt while the property increases in value?
These types of questions will help you work out what type of property investment and gearing strategy suits you best. This will also help you work out what type of property is more suitable: a capital growth property, or one that generates high yield.
✅Step 3: Begin researching for property
Now that you have an idea of what you want to get out of property investment, you can start considering the type of property you want to buy and its location.
Properties near public transport, healthcare, retail, childcare and other amenities are typically more sought after. They may cost more initially, but they generally also attract higher rents.
Once you’ve decided where you’d like to buy, look at the sale and rental prices of comparable properties in the area to get a good idea of what your rental yield is likely to be.
✅Step 4: Get your finance approval
Get A pre-approval for a loan to know your borrowing capacity. This signifies that a lender has positively assessed your finance, affirming your eligibility. It is not only about fulfilling your home -owning aspirations but also assuring your peace of mind. We can assist you with this.
✅Step 5: Settle and manage your investment property
Settlement day proceeds the same as it would when buying your own home, except you don’t collect the keys and move in. Instead, you engage a property manager and begin finding a new tenant or take over the lease agreement with the existing tenant.
With an experienced property manager and relevant insurance in place, your investment property journey continues.
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