Thinking of Buying an Investment Property? Your Quick Guide to Getting Started!
Investing in property can be a fantastic way to build wealth and secure your financial future. Whether you’re a first-timer or looking to expand your portfolio, understanding the basics is key to making confident decisions. At Goodwill Finance, we’re here to help you navigate the journey.
Let’s break down the essential steps:
1. Plan for Success: Your Budget is Key
Before you even start browsing listings, get clear on your finances:
Understand Your Budget: How much deposit can you realistically afford? What repayment amount are you comfortable with? Don’t forget to factor in upfront costs (like stamp duty and legal fees) and ongoing expenses.
How Much Deposit? Aiming for a 20% deposit can help you avoid Lender’s Mortgage Insurance (LMI).
Using Existing Home Equity: If you own a home, you might be able to use its equity to fund your investment property deposit.
Other Options: If a 20% deposit isn’t feasible, options like LMI or a Parental Guarantee might be available.
2. What's Your Investment Strategy?
Think about what you want to achieve:
Capital Appreciation: Aiming for the property’s value to increase over time.
Rental Income: Generating a steady income stream from tenants. It’s important to understand both gross and net rental yield (your income after all expenses).
Tax Benefits: Investment properties can offer tax advantages, like deductions for expenses or considerations around negative/positive gearing and Capital Gains Tax. We always recommend speaking with a financial advisor or accountant for personalised tax advice.
Common Tax Deductible Expenses can include:
Management and maintenance costs
Borrowing costs (like interest on your loan)
Council rates
Building insurance
3. Choosing the Right Property
Two big questions to answer:
Location, Location, Location: Look for areas with strong rental demand – think proximity to schools, shops, and public transport.
Property Type: Will it be a house, a townhouse, or a unit? Are you considering buying off-the-plan or building new? Your budget and ideal tenant will influence this choice.
4. Smart Loan Decisions
The right loan can save you money and offer flexibility:
Fixed vs. Variable Rate: A fixed rate offers repayment certainty, while a variable rate can fluctuate but may offer features like offset accounts or the ability to make extra repayments.
Interest-Only vs. Principal & Interest: Interest-only loans mean lower initial repayments (as you’re only paying the interest), while principal and interest repayments reduce your loan balance faster.
Talk to us at Goodwill Finance – we’re Home Loan Experts and can help find a loan that suits your strategy.
5. During and After Settlement: Managing Your Investment
Once the property is yours (congratulations!), you’ll need to:
Organise Insurance: Essential to protect your asset.
Manage Your Property: Will you self-manage or use a property manager? Property managers handle tenant screening, rent collection, and maintenance, and their fees are often tax-deductible.
Factor in Ongoing Costs: These include council rates, strata fees (if applicable), insurance, property management fees, and maintenance.
Ready to Take the Next Step?
Buying an investment property is a significant decision, but with careful planning and the right support, it can be a rewarding one.
The team at Goodwill Finance is here to guide you through every step of securing the right loan for your investment property.
Contact us today!
Phone: 0423 459 480
Email: [email protected]
Visit: www.goodwillfinance.com.au
Office: Suite 2/1265 Nepean Hwy, Cheltenham VIC 3192
We look forward to helping you achieve your property investment goals!
