Building property riches is not easy, but that doesn’t mean it can’t be done. If others have done it, so can you. With share markets becoming unpredictable by the day, many investors are turning to property for wealth creation. But before you embark on building a property portfolio, there are some things you should know. They will help you get off to a good start.
Optimise Lenders Mortgage Insurance (LMI)
Many investors starting their property investment journey use equity in their homes or savings to buy properties. However, this does not mean that you should wait until you build sufficient equity or have enough savings to start investing in property. To get into the market quickly, you can borrow 90% and get Lenders Mortgage Insurance. This insurance is required for property investors with deposits of less than 20%. It is a tax deductible technique that can help you to start and grow your portfolio. Once you generate ample equity, you can begin buying properties with larger deposits and forget about LMI.
Utilise Different Lenders
Lenders use different appraisal criteria to lend money. Leverage your borrowing power and get a good interest rate structure by shopping around. As your portfolio grows, diversify your lenders. While staying with one lender makes life simple, there’s only so much a single lender can give. Make use of different lenders to minimise risk and to enjoy greater flexibility of products. To ensure you get a great deal every time, enlist the services of a skilled mortgage broker experienced in property investment. A good broker will know the best lenders and might offer different products from various lenders. Create a strong relationship with your broker in order to enjoy swift portfolio growth.
Choose the Right Negatively Geared Properties
Clued-up property investors know how to pick negatively geared properties. They comprehend that the short-term financial losses they incur will be outweighed by capital growth. One of the benefits of negative gearing comes in the form of tax deductions. You can claim tax deductions associated with the expenses you incur, lower your rental deficit, and decrease your taxable income. In addition, negatively geared properties are mostly affordable and you can easily get a long-term tenant. Of course, properties should not be acquired merely for the tax benefits they provide. Due diligence and capital growth projection should always be completed before investing in a particular property.
Create Instant Equity
Identify investment properties that will provide equity within months. One way to achieve this is by buying properties in areas with less competition. Look for undervalued properties and not cheap ones; don’t be enticed by low purchase prices. Concentrate on finding a property with the best value for money and not the cheapest rate. Another method investors use to create instant equity is making smart renovations. You can renovate a run-down property, increase the rent, and get depreciation allowances.
Building a property portfolio quickly is no easy feat. But every single day, there are ordinary investors who create massive wealth through property investment. How do they do it? By implementing these tips. Don’t get stuck with just one property, create a property portfolio that will be the envy of other investors.