Choice Home Loans, Leederville,WA
One of the most common questions I get asked by clients looking to get into property is how and where they should invest to make their money work the hardest for them. With interest rates at record lows, buying an investment property is certainly an attractive option in the current market, but before you rush into buying an investment property, there are a few things you should consider.
Investigate fully – It’s important you do your research before you commit, like with any other investment. Investigate the area you’re considering buying in, and whether there are a good range of amenities nearby like schools and shopping centres. You should also get professional advice on property values, recent sales and the growth outlook for the area.
Once you’ve decided on a property, be sure you can afford the loan in addition ongoing costs. You will have to pay local council and water rates on top of any rental income you earn. If you’re buying an apartment, you also need to factor the strata levy (also known as body corporate rates) into your calculations.
Test your property out on yourself – although you might not want to live in your investment property, it’s important to still consider whether you could live in it if you had to – not only as an emergency measure if you encounter financial trouble, but because this test will tell you if others will want to live in it.
If the property you are considering buying is located in a less desirable area, or is far away from local amenities, this may affect its rental value and how long your tenants will decide to stay, so it’s important to consider this when you are deciding on a property.
Get good loan advice – Investment property loans can be slightly different to regular home loans in terms of the options you have and the application criteria. For instance, you may be able to make interest-only repayments for some of the loan term, and get the rental income the property generates taken into account for the potential to borrow more.
Again, it’s important to get professional advice so that you get advice suitable to your needs and objectives – speaking to a mortgage broker about your options can help.
Find a quality property manager – Renting out your investment property as soon as possible once you’ve purchased it, will maximise the return you get with rental income and also assist you to pay your mortgage. Doing this through a property manager will be at a cost, but it is the easiest way to go, as they will market the property, reference check tenants for you, and advise you on appropriate rental prices for your area.