1. Learn from a credible source
2. Formulate a plan
3. Lead with your head
Let your head, not your heart, have the final say when buying an investment property. It’s tempting to allow your emotions to get the upper hand when you purchase a home to live in, but an investment property requires an analytical approach. Keep your thoughts focused on the big picture: Will its location attract tenants? Can I add value by making some simple changes to sell this property at a higher price?
4. Assess your borrowing capacity
Be prepared to show your mortgage lender evidence that you can earn enough income to cover all the costs involved with acquiring and holding property on top of the cost of living.
Circumstances change, and your finances need to be ready to deal with an unexpected blow like losing your job, a period of rental vacancy or an interest rate increase. Building a safety buffer in the form of three to six months’ worth of repayments and living expenses is vital for protecting against financial stress.
Ask your Yellow Brick Road mortgage broker for help with assessing and understanding your borrowing capacity. A large bank balance is not a prerequisite for affording an investment property provided your cash flow and/or equity meets acceptable lending standards. A knowledgeable mortgage broker can help you find the best way to fund your investment purchase: “What to know about financing your investment property”, as well as structure your loan to suit your financing needs and investment goals.
5. Jump in
They’ll always be reasons for why you shouldn’t invest: too risky, too expensive, slowing economy. Rather than waiting around for the perfect time, use affordability as your criteria – if you can afford to invest and you know what you’re getting yourself into financially, then don’t let fear hold you back.
The low-interest rate environment has reduced home loan repayments and made borrowing more affordable, so the longer you hold off, the more wealth creation opportunities you potentially miss.
Build your people’s financial wellbeing and confidence. Book a demo now or contact us to learn more about our Financial Education Program.