Between balancing multiple home loans and swerving interest rates, building a property portfolio can feel like running the gauntlet on Australian Ninja Warrior.
Whether you’re new to the investment course or a seasoned pro, here’s five tips to help find your footing and become an investment ninja.
1. Crunch the numbers.
Prepare a budget. Look at the cost of servicing multiple loans and properties, including any upfront costs such as
stamp duty and inspection fees,
insurance and property management fees. And take a look at the ME
Home Loan Calculator, which will help you imagine what your repayments will look like so your course is as clear as possible.
Compare these repayments and other ongoing costs to your salary and rental income to work out what you can afford.
2. Pay to shorten the course.
Mortgage repayments tend to be made on a monthly basis. Making repayments more often – think weekly or fortnightly – might mean you pay less interest over the lifetime of the loan. So it’s worth doing your reconnaissance mission.
3. Avoid unnecessary obstacles
Avoid mixing your home loan with your investment property loans when you buy property. You can check with your financial advisor whether this helps to reduce accounting costs and maximises any tax deductions you might be entitled to.
4. Consider knocking out principal plus interest loans
Think about using interest-only loans for your investment properties.
Structuring your investment loans in this way keeps interest repayments consistent, which
may maximise tax deductions if you are entitled to them. It can also free up cash flow because you aren’t putting money toward paying down your mortgage.
5. Recruit a property coach.
A decent property manager will ensure you get quality tenants and your rental income is consistent – ultimately making it easy to manage your multiple loans. They will understand the market and know exactly what you should be getting for your property and when you should consider increasing the rent (without losing the tenant).
Plus, their fee is tax deductible.
This article has been prepared for informational purposes only and isn’t intended to be relied on as a substitute for advice from a qualified professional.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.