If you’ve just purchased your first investment and you’re coming to terms with the way everything works, now is not the time to buy another. However, if you’ve been around the block before and you’ve been slowly building equity for 2 to 3 years or more – you could be ready.
That’s because with the help of a savvy mortgage broker you can easily use that equity as a deposit to purchase another property and increase your income. Keep in mind that your lender may require that you keep between 10 and 20 per cent equity in your first property, so you may need to own 30 to 40 per cent of the home to make it work.
There’s no doubt that property investment can be a risky game and you shouldn’t take buying another investment likely. After all, with two investment properties comes double the risk and double the cost.
The more money you have behind you the more likely you’ll be able to weather any storms that come your way and come out on top. So if you’ve gotten a pay rise, or you’ve been steadily saving since you bought your first property you could be ready for the second.
A higher salary and more savings means if mortgage rates rise, or other unexpected costs come up with both properties you’ll be better able to afford them.
Plus if rental income doesn’t cover your mortgage repayments, you’ll be more able to afford to top the payments up the more you’re earning.
Investing isn’t as straightforward as it’s often made out to be. In fact, it can be incredibly difficult and knowledge, skill and considerable hard work is usually required to be successful. How is your first investment property going?
If you’re still getting your bearings, give it time and hold off on buying that second property. There’s no hurry. However, if your property has been a success and you’re confident that you understand what’s required you could be ready to invest again.
Keep in mind that two properties means double the work. You may need help to be successful, particularly from an experienced local property manager who you can trust.
The end game of any smart property investment is to build wealth, and the aim of building wealth is often to set up a comfortable (preferably long) retirement. If you don’t invest and create an income for yourself you could be living on the pension alone. According to Canstar the maximum amount a couple may receive is only $601.50 a week, or around $300 each.
If you’re nearing retirement age now’s the perfect time to step up your property investments – the earlier you start the better.
If you’re smart and manage to pay your mortgages off before you retire you could be earning that amount or more per property while sitting on a cruise ship somewhere in the Caribbean.
After you’ve gotten all your ducks in a row and decided that now’s the time to take the next step up the property ladder you should consider the cost of borrowing carefully.
That’s great news for those looking at buying more property. However, the OECD and other expert commentators expect that interest rates could start rising as soon as late this year. Keep that in mind when taking out a new mortgage and ensure that if rates were to rise you could easily handle paying the extra interest.
If any or all of these signs are showing for you, it could be time to make your next move on the property market. Invest intelligently and with the right professional advice and you could improve your financial future considerably.