You don’t have to be a billionaire to own your portfolio of investment properties. Answer: “No” is the resounding answer! Aussie investors are able to build a property portfolio that is envied, even with an average income. Even though some money is needed to start, there are ways to succeed in the market with an average income.
1 Interest-Only Repayment
You have to pay the interest only on your home loan during a specified period without having to pay down the principal amount. Interest-only loans are designed for people who want to buy an investment property. They reduce the likelihood of having to repay their loan. Rent from investment properties is useful when you need to pay your mortgage. You will have less financial burden and be able to service the loan.
Second Cash Out On Equity
You can use equity as a guarantee if you are interested in the property market and own a house. The equity in your home may allow you to borrow up to 80% of the value of an investment property without having to pay LMI. You can save a lot of cash. You can calculate your home equity by subtracting 20% from the value of the property and subtracting the debt.
3. Use a Guarantor
Friends or family members who are willing to help can be guarantors for the purchase of an investment property. This can allow you to build an investment portfolio sooner. As a form of extra security, guarantors can use the equity in their home to cover a portion of an investment property loan. If the 20% deposit has not been saved, this can help avoid LMI. The guarantors only need to secure a part of the total investment property loan.
Purchase the plan
A 10 percent deposit will be required to buy an off-plan property. The remainder is due after the property is built, which could be a few years later. You can then arrange your finances to save money. Financing investment properties requires a smaller mortgage. A government grant is also increased by purchasing off-plan.
#5 Profit from Costs
LMI is required when purchasing an investment property if the loan amount exceeds 80% of the value. Depending on the size of the loan, this can amount to thousands. Lenders may let you capitalize LMI. It does not need to be paid in a lump sum. LMI is included in the total loan amount. It lowers upfront costs and increases monthly payments. Make sure you can afford to pay the monthly repayments.
Buy an Investment Property in a Group
You can create a property investment portfolio with a family member or friend who is eager to get into the market. If you decide to split the property with someone, then only your deposit is due. You can invest without having to spend all of your savings if you own a percentage.
The possibilities for creating wealth by building an investment portfolio are endless. You can earn more than you would with a traditional superannuation. The housing Industry of Australia reported that 24 million Aussies are now in the market to buy property. In 2014, around 1.8m people, or 7.65 percent of the population, had an investment property. Renting out triple your properties will increase your income. Start with your first property investment.
Don’t let the money factor hold you back.
Different sizes and shapes of equity exist. Spend your money wisely to get the best return. You can make huge profits on a small budget by renovating the property and adding value (Westpac Australia, 2014). Even if your income is average, remodeling your home can increase its market value and rental. You can build a property portfolio and still pay your mortgage.
The conclusion of the article is:
Property investing can be a good investment in the long term. The real estate boom has been a boon for Australians of average income. Understanding when to make money is key to building your property portfolio and controlling your assets.
Create a portfolio of properties and take control of your assets. To be investment-ready, you need to know the potential of the market and not just look at the surface. Be informed about the risks involved in property investments and make wise decisions.
Here’s how Australian investors with middle incomes have benefited from the housing boom. Choose wisely, and you could have a portfolio worth millions. Do not let a lack of funds hold you back. Begin with a small investment and build up to a larger one for greater benefits.