There’s a reason that buying investment properties is so popular among Australians. In most cases, the value of your property should increase over time, and you can use the rental income from your tenants to pay off your loan. There are also tax benefits to buying an investment property. You can deduct several of your property expenses from your rental income to pay less tax.
However, buying an investment property doesn’t always mean that you’re going to make money. That’s why it’s crucial that you understand how to make the most out of your investment.
Here are some tips on how to do that.
Tip 1: Research the market you’re buying in
Before making any commitments, it’s important that you have a thorough understanding of the area that you’re buying into. Speak to real estate agents and locals about which streets are considered to be better than others, and then find out if there are any properties available in them or nearby.
You can also access a lot of information through the internet, such as average rent prices, demographics and property values for different suburbs.
Tip 2: Choose the right investment property loan
There are several loans to choose from when you buy an investment property. Choosing the right option will have a huge impact on your financial wellbeing, so it’s best to get a mortgage broker to help you.
The right investment property loan depends on your personal circumstances. For example, if you want the freedom to make larger repayments and pay off your mortgage faster, then you should consider a variable rate loan. But if you want more security over your interest rates and to make the same repayments each week, then it’s better to go with a fixed rate loan.
Tip 3: Manage your costs
Investment properties can be lucrative for the right investor, but you must remember that any property should be viewed as a long-term investment. You need to ensure that you can afford the costs of your repayments (and your rental or home loan costs, depending on how you’re living). Work out your total costs for the week and measure them against your weekly income, and ensure that you’re still coming out on top.
Tip 4: Hire a property manager
Finding the right property manager will not only ease your stress, but increase your income. A property manager is a licenced real estate agent that will help you manage your tenants and maximise the value of your property.
A good property manager will also advise you on things like property law and the responsibilities of both you and your tenants. They will also take care of maintenance issues and ensure that rent is being paid on time.
How we can help
If you’d like to start building your investment property portfolio, our experienced and licensed brokers at Wisebuy Investment Group can help you find the right loan. We can also help you with your application.
We service a diverse range of clients in Newcastle, Lake Macquarie, Port Stephens, the Hunter Valley and the Central Coast.