When To Buy An Investment Property

As real estate has long been regarded as one of the safest ways to generate wealth, is there such a thing as the right time to buy an investment property? 

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Once you’ve managed to successfully purchase your first home, there usually comes a point where most Aussies start looking at other avenues to increase their income. Suddenly, property becomes less about having somewhere to live, and transforms into a logical means to generate wealth – or to at least try to. 

When we refer to investment properties, the term is usually used to describe houses, apartments or townhouses that investors buy, and in turn rent out to another person to live in. While investing in property certainly isn’t for everyone, one of the hardest parts of the process is getting the timing right. 

Five Signs You’re Ready To Buy An Investment Property

Some people enjoy dabbling in the stock market, and others in cryptocurrencies. However, many Australians have traditionally viewed investing in property as a “safer” long term option for capital growth, and with less exposure to potential risks. 

However, purchasing a second abode is an entirely different experience when compared to that of a first home buyer. The type of property and options for finance will usually be quite different the second time around, but it’s important not to take on a second mortgage before you’re ready. As such, what type of signs could indicate that you are in the position to buy an investment property?

You Have Access To Equity – In simple terms, equity is the term used to describe the financial difference between your property’s market value, versus the balance of your mortgage. Depending on your personal circumstances, unlocking the equity in your property could allow you to buy an investment property without having to save up for the all important 20% deposit. 

There’s Low Vacancy Rates – Low vacancy rates are considered to be a positive for property investors, because it generally means people want to live in a particular area or building. Opting to buy an investment property while there’s a low vacancy rate in the rental pool means you should have no issues finding tenants. 

To Lower Your Taxable Income – Negative gearing is the term used when any expenses that a rental property incurs are higher than the actual income earned from it. However, this isn’t necessarily a bad thing, as the Australian Tax Office treats any expenses incurred by property investors as tax deductible, just like they do for other business costs. 

Interest Rates Will Rise – Although it may sound counterproductive to buy an investment property now while interest rates are on the rise, in reality they’re only going to go higher – meaning that now is the ideal time to become a landlord, and secure fixed term interest rates on a second mortgage. 

Rentvesting Appeals To You – Even if you don’t yet own your own home, you can still buy an investment property and become a ‘rentvestor’. This phenomenon is wildly popular with Millenials, and is a homeownership strategy in which consumers rent a property to live in that’s in line with their lifestyle, but they own an investment property that’s in line with their budget. 

For those ready to kick start their journey as a budding property baron, it should come as no surprise that six in ten Australians are now working with a mortgage broker for help in navigating the world of home loans – but where do you find one?

Partner With The Property Finance Experts

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

Relentless in their pursuit of gold star customer service, the team at Madd have now expanded their services to include end to end financial planning. Through Madd Life, the aim is to collaborate with clients to identify long term goals, and transform them into a road map. 

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd proudly work together as a collective to turn your goals into reality.

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