Whether it’s as an investment asset or a holiday home, buying your second property poses a unique set of challenges. Here’s what you should consider. 

Australians love property, and it’s not difficult to see why. Property is seen as a secure, long-term and low-risk investment with clear financial returns.

Indeed, in 2016 total returns from property in Australian capital cities was 7.5%.

But buying a second property is different to your first, with a new set of challenges and opportunities. What do you need to think about?

Pick the right property at the right price

An investment property is only a good investment if it delivers you a return, so when selecting a place to buy, you need to be confident it will increase in value.

Research the neighbourhood to get an understanding of current price trends, and to see what’s on the cards – roadworks, public transport changes, business or residential developments – which could affect its value in the future.

You should also consider how attractive the property will be to renters, as any time it’s vacant will cost you.

Look for a place that is ready to lease, unless you want to shell out for major renovations.

Make sure you really have the cash

This might feel like a no-brainer, but if you aren’t certain you’ll have the rental income or another form of cash to service your second mortgage, you risk having to sell the property before it’s suitably increased in value.

You also need to be sure you have enough money left over to reach your other important short and medium-term financial goals, such as paying off a loan or investing in education.

Get a good property manager

A good property manager can save you a lot of headaches and, ultimately, money.

Your property manager should be able to provide you with advice on legal matters relating to the property, troubleshoot any issues with tenants, and advise you on your responsibilities as a landlord.

Importantly, they should also be able to advise you on when you should and shouldn’t increase your rental terms, help you stay on top of the changing market and make sure you’re not missing any additional income.

Compare different mortgage options

An investment property brings various potential tax implications so it makes sense to shop around for a mortgage that minimises your tax obligations, and maximises your capacity to achieve other life goals.

This is where we come in.

By helping you find the best loan and structure, we can reduce your accounting costs and maximise your tax benefits to save you thousands of dollars in the long run.

Still unsure?

Taking the leap into the world of property investment can be daunting, particularly if it’s the first time you’ve considered managing tenants.

If you’re still not sure about what you need to consider before signing the paper work, come and have a chat with us; and remember that we do Mortgage Broking too.

We’re happy to talk through your options to make sure your investment pays off.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.