With the Perth property market set to recover from the post-mining boom slump over the next few years, now is the ideal time to be thinking about property investment. Establishing or expanding your portfolio while the market is weak will put you in a great position to benefit when conditions improve.
That being said, good property investment is as much about being smart with your finances as it is about finding the right properties. Being smart with your money, planning and staying ahead of the game can be the difference between a successful investment and a financial disaster.
Making the right property investments can be the best financial decision you ever make so make sure you check out these 6 finance tips to be as smart as possible with your money.
1. Review Your Rates
Reviewing your interest rates once a year can help to reduce some of the basis points off your loan. Even a seemingly minor reduction can make a huge difference over the lifetime of the loan, and this can free up extra capital to invest in other properties.
2. Beware Of Overcapitalisation
Truly savvy investors are very careful of overcapitalisation and will always leave a buffer in place in case of emergencies (like vacant properties or losing your job). As well as making your investment more secure, it’ll also help reduce the stress and worry in your life by giving you the peace of mind that comes with a financial safety net. The more investment properties you have, the bigger your buffer fund should be.
3. Find The Right Mortgage
It’s best to select your loans based on your individual investment strategy and circumstances. Finding a reliable, independent mortgage broker can be a great way of ensuring that you’re able to properly consider all of your options. Also, recent banking regulation changes have tightened or eliminated a lot of interest only loans, so make sure you factor this into your plan.
4. Don’t Put All Of Your Eggs In One Basket (Or Bank)
Diversifying your loans with different banks can help insulate you from interest rate rises and unfavourable conditions. The Banking Royal Commission has already made plainly clear that you can’t be sure you’ll get treated well by all financial institutions, so it’s important that you keep your options open and work with different lenders.
5. Plan & Think Ahead
As the old saying goes, if you fail to plan, then plan to fail. Property investment shouldn’t be a haphazard affair. Consider what position the purchase of one property will leave you in when it comes to purchasing the next.
6. Get Comfortable With Mortgage Lenders Insurance
Good investment is often all about timing, and paying mortgage lender’s insurance can mean that you’ll be able to purchase a lot sooner (as you won’t have to wait to save a large deposit or to build up equity on your existing properties). The initial extra cost can be well worth it in the long run if it allows you to purchase the additional property at the right time.
Are you a financially savvy investor looking to build an investment property that will allow you to capitalise on the unique position of the Perth property market? At Developments by Impressions our industry leading knowledge, expertise and service can help make the whole process as easy and profitable as possible. Click here to read our property development FAQs or contact us to find out more.