Property investing is suitable for clients who have (1) surplus cash flow after covering their living expenses and current debts (2) saved a deposit or hold equity in other property.
You should also need to develop an investor’s mindset by understanding what to look for in an investment property, the risks of property investing and how to mitigate them.
We do not recommend property investing simply to obtain a tax benefit or because someone told you to. You need to make your own enquiries to determine if it is right for you.
We can help you with:
We can also help optimise loan portfolios for experienced property investors.
We can optimise your existing investment property loans by:
Each client’s requirements are unique so please speak to us if you are looking to optimise your overall property portfolio.
This will depend on your borrowing capacity, available deposit and individual goals. As these factors are unique to every client, we will need to assess your personal scenario to help you set an appropriate investment property budget.
We recommend an 80% LVR for where you are new to property investing or purchasing in a slow market.
Borrowing above 80% LVR incurs LMI for most clients. We only recommend this for more experienced property investors, where the purchase price is relatively low, the market is rising and there is an opportunity too good to be missed, or if you are eligible for a waiver of LMI.
Negative gearing is when your rental income is less than the total of all your investment property expenses leading to a net loss on your property and therefore a tax deduction.
Typical investment property expenses include interest costs, council rates, water rates, property management fees and maintenance and repairs.
Negative gearing makes sense when the capital gain on your property outweighs the accumulated after tax losses on holding the property each year. This is important as you will need to cover the loss each year from your savings or surplus income.
Positive gearing is when your rental income is greater than the total of all your investment property expenses leading to a net profit on your property and therefore an increase in your taxable income.
Typical expenses are listed above.
Positive gearing makes sense when you are purchasing or holding a property primarily for an income stream rather than solely to make a capital gain.
A positive cash flow property is where there is a positive return on your property after factoring in your tax refund, and importantly any non-cash based expenses like depreciation.
That is your Rental Income – Property Expenses + Tax Refund is a positive figure.
By definition a positively geared property has positive cash flow. However, a negatively geared property can become positive cash flow after factoring in your tax refund.
Yes, as long as (1) there is sufficient equity and (2) you can demonstrate you can service the additional borrowings, you are able to use the equity in an existing property to help you purchase an investment property.
If you are looking to do this, please contact us so that we can assess this is feasible for you and it can be structured in the right way.
There is a minimum deposit you will need to simply secure the property and take it off the market. This is typically 5 – 10% for a seller to accept your offer.
If you do not have more than that, we can consider using a Family Guarantee if your parents have equity in the property. You can also consider paying Lenders Mortgage Insurance if you and the property you are buying are eligible.
With both these solutions, you must be able to demonstrate you can afford the higher loan repayments that come with a higher loan amount.
Yes, we have a panel of buyers agents and investment property firms specialising in different property types, geographies and client profiles. Please contact us if you would like to be introduced to a buyers agent. We will recommend who we believe best suits your needs.
Yes, we recommend seeking a pre-approval prior to looking for an investment property. This will allow you to know your limit and negotiate more strongly. Most buyers agents will only formally start looking for an investment property once you have a pre-approval.