How to Become a Landlord

29 November 2021

newcastle mortgage broker

More and more Australians are becoming landlords by buying investment properties. Having an investment property allows you to:

  • generate rental income from tenants (that you can use to pay off your investment property loan).
  • pay less tax if you use negative gearing as a strategy.
  • build your long-term wealth as your property increases in value over time.

Here are 5 steps to becoming a landlord.

Step 1 – Understand your goal

For example:

  • Do you want to buy an investment property to get long-term rental income and capital growth?
  • Or do you want to buy a rundown property and renovate it to sell at a profit (known as ‘property flipping’).

Both of these goals will require different strategies to achieve them.

Step 2 – Develop your investment property strategy to suit your goal

For example:

  • If you want to maximise your rental income and capital growth potential, you will need to buy in a high demand area. Ideally, you should also buy a low maintenance property that isn’t likely to need any significant repair or renovation work in the short to medium term.
  • If you’re looking for a property to renovate and flip, you should look for an undervalued, rundown property with potential. Ideally, this property should be in a good location to maximise your renovation return.

Step 3 – Work out your borrowing power

Working out your borrowing power will let you know the price you can afford to pay for your investment property. Your borrowing power will depend on how much you can afford for your regular investment property loan repayments. This in turn will depend on:

  • your regular income.
  • your regular expenses (including repayments on any other debts you have like your home loan, car loan or credit cards).
  • tenant income from the investment property.

You can use our borrowing power calculator to give you an idea of how much you could potentially borrow for your investment property.

Step 4 – Do your investment property market research 

Once you know your borrowing power, do your market research to identify good properties you can afford that suit your investment property goal. It’s important to buy at the right price to maximise your return.

Step 5 – Talk to a mortgage broker to get pre-approved finance

Getting pre-approved finance can allow you to negotiate the best possible price with a property seller. You will have an advantage over other potential buyers who make offers that are still subject to finance approval, especially with sellers who want to settle as quickly as possible.

How we can help

If you’re looking to grow your wealth by becoming a landlord, our expert mortgage brokers at Wisebuy Investment Group can help. We can also help you with your investment property loan application.

We service a diverse range of clients in the popular Newcastle, Lake Macquarie and Maitland areas. Our licensed and experienced brokers work with more than 60 lenders in the Australian market.

Contact us today for an obligation-free chat to find out more. We’d be happy to answer any questions you have.