As a mortgage broker in Kwinana and other areas, I have seen a lot of market downturns and upturns. Even with record low interest rates, the housing market is beginning to stagnate a little during the second half of 2014. This provides a rare opportunity for many homeowners: a chance to purchase an investment property at a price that will probably never be this low again.
A mortgage broker can take a look at your financial situation and tell you if you have the resources to purchase a vacation home or an investment property. Most large investors started out with a single property. The superannuation regulations are allowing many Australians to use self managed super funds (SMSFs) to finance investment properties.
While times are uncertain, many tend to be conservative in their financial approach. Many of those people wish years later that they had taken advantage of the times when they could have profited from investments.
Here are some things to consider if you are thinking of buying an investment property.
Do you have enough income to pay two loans? Most lenders are going to want to see you with the ability to pay both loans. If your numbers work out, you should save on interest and fees.
The real estate agent handling the property will be able to provide you with a rental estimate letter. It is required by the lender. Beware, though: the lender will only consider between 70-80% of the income, as expenses such as maintenance and property management could consume a high proportion of rent.
Try to choose a property that will either break even or produce positive cash flow.
You need extra funds as a backup plan or “buffer” in case you find yourself with insufficient funding for a few months. It is advisable to have between three and six months’ living expenses on hand.
Call Smartline Rockingham today for an obligation free consultation: (08) 9527 1800.