6 Smart Finance Tips For Property Investors
Real Estate investing is not just about property – it’s about smart finance.
You don’t need 6+ properties to become financially secure. You just need 4-5 high “performance property”, less is more. Performance property is high growth, high return with huge tax benefits. Capital grow gives you equity so you can buy your next investment sooner. Tax benefits put money back into your pocket, the more the merrier. And good rental return so the bank can lend you more otherwise the banks will stop lending you money because you lack income.
To get ahead with your finance, you need to follow these 6 smart tips.
1. Review your interest rates once a year – if you can reduce some basis points off your loan that means you could save $$$.
2. Don’t overcapitalise – always leave a buffer in place. The more investment properties you have the more money you should have in your buffer. So that you’ll sleep well at night if you lost your job or if your property is vacant.
3. Which one is better for you, interest Only vs Principal and Interest loans? It’s best to select loans based on your individual strategy and circumstances. Interest only loan is more beneficial for investors, you can pay less, claim more tax and save more money. Principal and interest loan is more beneficial for owner-occupiers, as you need to pay off your mortgage asap. One of the better options is to speak to an experienced investor to gain their vast experienced.
4. Don’t put all of your investment properties into one bank. Make sure you diversify out your investment with different banks.
5. Have a plan. Fail to plan is planning to fail. When you’re investing in a property, plan for your next property and the next one. Each investment property work out what position that will leave you for your next deal.
6. Mortgage insurance is your friend – it may mean you can buy your next property much sooner than waiting to save a much larger deposit or for equity to build up on your existing property. Preferably to use mortgage insurance only on your first or second deal.