Pakenham & Warragul
All enquiries & appointments (03) 9067 6995
When investing in property there are several things you must consider and the first is “Why am I investing in property”. For some people it can be to generate some extra income through rent, for others it comes down to long term goals and the expected growth in the property value. This question plays a large role when deciding on “should I invest in property” and “what sort of property should I buy”. Should I pay interest only or pay off the loan principal too? If you still have a home loan (which is not a tax deduction) paying only the interest off your investment loan (which is a tax deduction) can be a sound strategy as it does free up your cash flow to pay down your current home loan faster. Of course if you do not use this lower investment loan repayment to reduce your home loan you faster, you may end up worse off.
Cashflow is critical in your property investment. We can help you understand the costs of holding the property versus the rental income you may receive as well as the potential tax deduction that you may receive when you lodge your tax return. Should you wish to pay less tax during the year instead of waiting until you lodge your tax return, our accountants can advise you on varying your tax payments.
When borrowing to invest you should understand “cross collateralizing”. This is when you use your existing property as security for your rental purchase so you do not have to put in a cash deposit.
We meet clients who are nervous about pledging their home to secure their rental property. If you wish to look at methods to keep titles separate then we can assist however we advise our clients to understand some legal implications of debt default. If a rental goes bad and you sell at a loss, you cannot just walk away and assume your home is safe. It makes more sense to understand risk, such as losing your income due to ill health, and planning to mitigate risks.
Similar to your standard home loans we can also look at refinancing your investment loans to get you the most competitive rate and product that meets your needs. This can include resetting an Interest Only cycle.
When it comes to rental properties we don’t just need to be talking about your standard residential investments. You can also look at investing into a commercial property such as a factory, shop or office space. For more information on this please see: Commercial Finance