I feel sorry for first time investors as it’s a minefield out there with so many options, so much misinformation, scaremongering and get rich quick schemes – is it any wonder why many give up…
So how to cut through the investment property propaganda?
There are some basic facts and steps you need to take before you enter the investment property market place and it really is not that hard.
Step 1: Find out what you can borrow
The very first thing every investor needs to do is find out what they can borrow.
Until you know this very basic fact then looking at “high growth areas” “investment property hot spots” talking to friends and relatives and potentially wasting your time and theirs, find out what the banks are going to lend you.
Contacting a licensed and independent mortgage broker should be your first step.
They are the only ones qualified to find out what your borrowing capacity it.
Your local bank is not always the best place to start as they only have their loan products available but there are many other great lenders out there and it is most likely not going to be one of the big 4.
It will be based on many factors with the key ones being income, equity already held in property and available cash savings. Other very important facts they will need to know is what industry you work in, what is your exact pay structure, what are you credit card limits, any other loans, number of dependents, living expenses and more.
All lenders are becoming much stricter with their compliance and although they are still lending as much as they always have, they now require a lot more information about who they are lending to.
This being said if you are honest with your broker at the start and provide evidence of pay, loans etc then there is often a lender with a product to suit you.
There are a number of great brokers out there and if you know one contact them now, if not I work closely with a number of great brokers so contact me and I can refer you on.
Consultations are free and come with no obligation so get onto it…..
Once you have some idea as to what you can borrow, the next step is finding out what it’s going to cost or make you a week.
Unless you know how to work out depreciation and tax benefits that will apply to you, as well as rental yields and costs of owning an investment property, this is where you need to seek professional help – that’s where I come in.
As I represent a builder who is very active in the investment property market – my expertise and advice is free and comes with no obligation.