INDEPENDENT PROPERTY INVESTMENT
If you are a confident investor then independent property investment is something you may wish to consider. The first step in the process is going to be to seek financial advice to see how much you will be able to borrow. The banks will generally lend up an 80% loan value rations or LVR. The LVR is calculated by simply dividing the amount you wish to borrow against the bank valuation of the property you are purchasing. Different banks will have different LVR ratios depending on their appetite for investment lending but as a general rule you will need to have LVR ratio of 80% or 20% deposit. You will not necessarily have to have the 20% in cash you may be able to use some equity that you have in an existing property.
LONG TERM OR SHORT TERM GOALS
You will need to work out what you would like to achieve from your independent property investment by working out your investment strategy. Will the monthly rental pay the interest on your loan? Will you pay interest only or will you pay some off your principle? Will you reinvest the money that you will make from the depreciation deductions off your income tax? Are you going to hold the property for the long term or short term?
In Australia since WW2 on average property values have double every 7 years. The banks will lend you an interest only loan but it will only have a 10 year lifespan at which point the property will need to be sold or refinanced. The longer that you hold the property the lower the risk of short term market fluctuations you will be able to be more certain on achieving a good capital growth on your investment.
THE BENEFIT OF INDEPENDENT PROPERTY INVESTMENT IN NEW HOUSES
There are several major benefits in buying a new property as an investment. Firstly you get the builders 6 year structural guarantee and 12 months maintenance period so that you are not going to have to spend money on repairing the property so that it is in a fit and safe condition to rent out. Another major benefit is that you can depreciate the fixtures and fittings in the home and write this off your taxable income. As the property is new you will also be able to maximize the rental return in the market place.
ENTERING INTO A BUILDING CONTRACT
When you buy a new house and land package you will need to enter into two contracts, the first will be for the land and the second will be for the construction of the new home. You will need a solicitor or conveyancer to handle the purchase of the land. The solicitor should advise you on what land searches you will need to do. It is also a good idea to have them look over the building contract, take notice of any special conditions in the building contract.
FREE EBOOK INVESTING IN PROPERTY ESSENTIAL THINGS TO CONSIDER
WE CAN HELP TURN YOUR PLAN INTO REALITY
If you are looking at an independent property investment we can help you turn your dream into reality. We can organise the whole process for you, we can help you obtain finance, select the right property, go through land sales and building contracts with you, monitor the construction process and help with renting out your finished property. We will be with you every step of the way. Contact us for more info.
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