Nine Tips for Property Investors
Stephanie Brennan has a $2.3 million property portfolio and only aged 24. She has managed to build the portfolio in just 3 years! The best thing about it is she hasn’t been given any money from her parents and is on track to retire by the age of 30. Here are Stephanie’s nine tips for investing in Property:
- If you want to live in a suburb but can’t afford it, look at the ones which surround it and buy there, as the prices will go up as people are pushed out.
- You can buy with a deposit ranging from 5%-20% or more plus costs, so if you bought with a 5% deposit plus costs on a $500,000 unit this would mean you would need approximately $49,000 of which the repayments would be $1,647 per month principal and interest. That’s as little as $400 per week — than the medium amount of rent people pay on the northern beaches.
- Some banks accept a relative’s house as guarantee or cash as security instead of a deposit, which means the banks will lend 105% — purchase price plus costs.
- Buying a property to live in will cost you more than buying an investment property simply because you are the one paying the mortgage rather than your tenants. I’ve found what works best is to start with an investment property rather than an owner occupied and then ensure this investment property provides positive cash flow. The property will still be negatively geared as you hold a mortgage over it, however, the income you receive is greater than your expenses making it positive cash flow. This also means that the additional funds you make from the property increases your overall income, meaning your ability to service the loan increases. This means you could then buy an owner-occupied property and have the positive income from your investment helping to pay down the property you live in.
- Always get a strata report and pest inspection before you buy.
- If you’re buying at auction, get a valuation prior to bidding. This can be done by seeking pre-approval from the bank first and then ordering a valuation or simply ordering a valuation upfront.
- Always pay off one property as quickly as you can because then you will always have a place to live.
- With mortgages, look at the comparison rate, the revert rate and ask what fees are associated with the loan especially if you fix the rate as often there are break costs associated with this.
- Save money by taking lunch to work, skipping expensive takeaway coffees, cutting back on eating out, and giving up Foxtel or other cable services for cheaper versions.