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How to Start Your Property Research

Start Your Property Research Now.

 

Property research made easy because there is such a wide range of information available to homebuyers and property investors, but it can be overwhelming if you don’t know where to start…

For example you are confronted by auction clearance rates, vacancy rates, pending building approvals. Not only are all these stats and figures overwhelming, it can confusing for some too. So…would you want to buy a property without proper research?

Property research whether you are purchasing your first home or starting an investment portfolio, the traditional methods of research such as websites, magazines, news reports and company announcements are always a good place to start.

However, the property research you need to do varies, depending on your end goal and/or profit targets.

If you are looking for your primary place of residence, factors such as proximity to family and friends, layout and design and overall feel have a major effect on the area and property you choose.

What if you are purchasing an investment property?

Your property research would focus less on personal preferences and more on what adds value and maximises the cash-on-cash return for your investment.

You want to consider a rental yield of 9% or higher because you are basing your research on how much this suburb has risen in value historically, and whether there is a potential uplift to add value through a renovation or the property meets requirements of tenants.

property research
Property research because searching is not the same as researching…

There are four key factors which you want to consider when starting your property investment research.

Property research for location: In particular, you want to consider the proximity of your property to public transport, schools and employment opportunities.

Areas in close proximity to the CBD in major cities have a real advantage when you consider the above factors. However, if you want to enter these areas today, you need to pay a premium and of course this depends on your financial circumstances.

Property research infrastructure: If the well-developed areas near major cities are out of your price range, you need to make special consideration for current and future infrastructure which may make an outer ring suburb more accessible in the future.

If you can ideally select these suburbs early, you would be able to snag a bargain and see significant increases in value (capital growth) as the infrastructure develops…

It’s easy to assume capital growth and decline looking at median price of a suburb alone, however it’s not accurate. There are sub markets within a city and even in a suburb, individual properties can attract different levels of demand.

Property research affordability: There are two key considerations to look at. Firstly, you need to sit down and work out how much you can afford to spend on your investment property, taking into account stamp duty, legal fees and property management fees.

Secondly, you need to consider the demographics of the area you are purchasing in and decide whether your target market (potential tenants) would be able to afford the rent you hope to achieve.

Even when median prices are falling, there are pockets of opportunity in each city which bucks the trend. The same applies in growth cites as not all suburbs perform the same way. In fact, each suburb behaves like a mini-housing market according to its own dynamics.

Finding suburbs with potential for price growth may not even be your primary goal, especially if you’re thinking of buying your first investment property and don’t know where to start?

What if you are an experienced investor motivated to avoid repeating past mistakes?

Property research because you need to avoid the persuasive high rental yield areas caused by falling prices, suburbs where prices peaked and are just about to crash. These locations have rising rental vacancies and of course leave you short on rental income.

The best property investments are found where the rent more than covers all outgoings, including your loan repayments from day one and local property market has power to provide rent increases and price growth.

Perhaps you don’t have time or resources to do due diligence and analysis to locate these hidden suburbs, so where can you find them?

Property research, there are a number of amazing resources available to property investors and homebuyers looking to enter the property market, so you don’t want to limit yourself to only researching via online resources.

An experienced team of experts can be worth their weight in gold throughout your property investment journey. If you would like more ways to ensure the success of your property research or information on how to begin you research, contact us today using the form below…

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Property Research

Property Investment Loans?

What You Need to Know About Investment Loans?

 

Investing in property? There are a range of residential investment loans to meet the varying needs of property investors. In fact, property investment loans are not too different from any other type of home loan.

Property Investment Loans for when deciding on the right investment loan most people only consider the interest rate.

Property investment loans include many other considerations like (hidden) fees you pay which can include:

  • Application/establishment fees, range from $0 to $1,000 and more depending on lender and the type of loan you need
  • Ongoing fees can range between nil to $550 per annum
  • Early exit fees/penalties from $0 to thousands
  • Fixed rate loan and economic costs
  • Discharge fees in order to get your title back you need to discharge any mortgage held over it, lenders charge differing fees
  • Mortgage insurance fee depending on lender/insurer, which is calculated using a percentage of loan amount (LVR)
  • Additional lending costs, charged to access any additional funds you have paid on your loan (redraw)
  • Fees charged for changing the security over loan and switching loan products also vary between lenders
  • Valuation costs and legal fees should also be considered…

Property Investment Loans, it’s important to tailor the correct product to suit your investment needs.

property investment loans
Property investment loans

 

Property investment loans example…let’s say you want to maximise the most suitable finance structure by using the best tax structure discussing the options with your tax professional.

Property Investment Loan Types: Property investment loans are no different to home loans. Interest rates, fees and lending policy are very similar:

  • Variable rates
  • Fixed rate loans
  • Line of credit
  • Construction loan
  • Low doc loan

All these types of loans are available for investment property loans.

It does not really matter what type of loan you choose just as long it fits your investment strategy using an interest rate which is competitive and fees (as discussed above) are not excessive.

Property investment loans considerations: professional packaged loans that allow you to put multiple loans under the one package which can help to save on establishment costs and ongoing fees.

Line of credit loans can be used to access equity from an existing home, used as a deposit or to purchase an investment property. If you already own a property, a line of credit is a good way for you to tap into any equity you’ve built up in property which can be used as a deposit for buying investment property.

A line of credit loan allows you to draw from a fixed amount at any time to pay for whatever you want. It’s kind of like a credit card with a big limit but the equity in your home acts as security for the loan.

Interest only loans and principal and interest facilities may be better utilized depending on your personal circumstances and investing objectives. Interest only loan the principal remains the same.

You only pay the original amount you borrowed when you finally sell investment property as this type of loan is useful for investors because your monthly repayments are less than they would be if you were paying off principal as well.

Fixed or variable rate loans also depend on borrowers risk profile and property investment strategy.

Long term property investors with a long term views prefer fixed rates so they know exactly what their repayments are.

Interest Only or Principle and Interest: Interest only loans allow you to only repay interest on the loan without reducing the principle loan amount.

This can assist in allowing a borrower to reduce non-deductible debt or bad debt more quickly. Principal and interest repayments allow debt to be reduced and more equity to be established.

Most property investors prefer interest only loans for the following reasons:

  • Investment interest repayments are tax deductible
  • Principle payments are not tax deductible
  • Principle payments are better utilised via personal non tax deductible debt which reduces amount paid each month freeing up cash flow…

Property investment loans like other loans means you can choose fixed, variable or split interest rates with flexible features like redraws, etc…

Property Investment Loans

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