Property investor can you afford an investment property?
If you fail to plan and don’t ask the right specific questions, you could be tempted to buy anything and everything, right?
What if you realise you are somewhere where you did not intend to be? Australian property investors make a lot of costly mistakes when financing their portfolios.
If you’re reading this, you are right on the ball…don’t panic because we’ll help you avoid the top four critical errors investors make:
1: Not getting pre-approved: Pre-approved gives you a better idea of how much you can afford to borrow. It means the lender has verified your information and credit rating, agreeing to provide you with a specific amount of money.
It means as a property investor, you are in a much better position to go house hunting with some degree of confidence in knowing how much they can afford and have financing to back-up their deal.
2: Too much emphasis on interest rates: While lowering the costs associated with financing is crucial, a lower interest rate alone does not always equate to the best loan.
For example: Lender offers you 6% interest at 35 years amortisation, which puts in your pocket thousands in annual cash flow relative to another lender offering you a lower interest rate of 5% and shorter amortisation of 20 years.
Australian Property Investor Biggest Mistakes
Property investor, you would be smart to also consider other aspects of the loan such as additional fees associated with commissions and penalties as well as attractiveness of loan terms…
3: Not analysing the property: Property investors often purchase real estate without factoring in maintenance, capital improvements and vacancies, which means they are setting themselves up for financial shortfall and problems.
Yes, the same is true for a property investor who purchased after overestimating the rental income.
4: Lack of planning: Why are you investing in real estate? How much cash flow do you expect on a monthly basis? How many properties do you need to get you where you want to be?
Upfront planning with an ongoing review of your plan helps you stay focused, saves you money and increases your chances of success.
As a property investor, what if you would like to ask a question or need clarification because investing can be a lonely road if you are navigating by yourself.
Not only is property investing difficult to apply theory in practical situations, finding a like-minded person to help support your vision can also be difficult…
The property market has certainly picked up this year with buyers taking advantage of historically low interest rates and an improving market. Want to take the fear out of buying your next property?
If you want to take advantage of the unprecedented opportunities in today’s property market, click here to tell us what you think so our property investment advisors can help you work out whether you can afford an investment property, and assist you in selecting the best loan for your needs…