Why investing in property may be the answer
Australia currently faces a chronic housing shortage which, coupled with a rapidly expanding population (through natural increase and immigration), has pushed rental vacancy rates to historic lows and put upward pressure on rents. There are simply not enough houses to go around.
Use the equity in existing property
Make your current property work for you! There’s no need to own your home outright or sell it to access enough equity for an investment purchase. Equity is simply the difference between what your property is worth and what you owe. For example, if you have a property valued at $600,000 with a mortgage of $400,000, you have $200,000 worth of equity. You may be able to borrow up to $80,000 against this equity to purchase an investment property. Using this equity and combining it with the added rental income could mean that you can buy another property sooner.
The decisions you make today will determine the lifestyle choices you have in the future
The following factors should be taken into consideration when purchasing property as an investment:
- The likely return – yield and capital growth
- Buying and selling costs
- Cost to borrow money, ie interest rates
- How attractive the property will be for likely tenants or future buyers.