Real Estate Investment is not just about property – it’s about smart finance.
You don’t need 6+ properties to become financially secure. Instead, you just need 4 – 5 “high performance properties”.
Would you prefer to own 20 poorly performing properties, or rather 4 – 5 high growth properties? Less is more.
Performance properties are high growth and high return, all with huge tax benefits. Capital growth gives you equity so you can buy your next investment sooner. Tax benefits put money back into your pocket, the more the merrier. Lastly, performance properties provide you with a great rental return, meaning the bank is capable of and more likely to lend you more money to secure the purchase.
To learn how to save thousands of dollars on your investment properties, take a read of these 6 smart finance tips.
1. Review your interest rates once a year.
If you can reduce your loan, you can save thousands of dollars. It never hurts to ask!
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. Having that buffer in place allows you to sleep easier at night during difficult circumstances such as the loss of employment or vacant properties.
3. Think about which 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 loans are more beneficial for investors since you can pay less, claim more tax and ultimately save more money. Principal and interest loans are more beneficial for owner-occupiers, as they typically need to pay off their mortgage as quickly as possible. It is always in your best interest to speak to an experienced investor to gain further knowledge to make an informed decision.
4. Don’t put all of your investment properties into one bank.
Make sure you diversify your investment with different banks. This is a must-do for any successful property investor and provides the opportunity for additional security and longevity for your properties.
5. Create a plan.
Failing to plan is planning to fail. When investing in a property, plan for your next property too. Always think ahead. With each investment property purchased, take the time to determine your financial position for your next deal.
6. Mortgage insurance is your friend.
Having mortgage insurance may mean that you are able to buy your next property much sooner than anticipated. Mortgage insurance means you do not have to save a large deposit or wait for equity to build on your existing property. Typically, it is preferable to use mortgage insurance only on your first or second deal.