SMSF’s & Investing In Residential Property?
The Benefits of SMSF Investing in Residential Property
Residential properties are one of the most popular types of investment choices and for good reason. The process of renting out a home or unit in order to see a return on your investment is simple when compared to other types of investments. While there are advantages and disadvantages to all types of investments, there are quite a few benefits that an investor can receive from choosing one or more residential properties as their preferred investment type, including:
- Your return can come from rent, capital gained over time if the property value increases, or both.
- Interest that you pay on the loan you took out for your residential investment property may result in tax savings and other benefits.
- Residential investment properties are tangible, which can be beneficial to cautious investors who want to see what they are putting their money into.
- Potential for even greater income if you decide to manage your investment property yourself.
Financing Your Residential Investment Property
Whether you’re a first time residential property investor or you already own several rental properties, many people end up financing at least part of their residential property purchase. There are quite a few options available for financing investment properties in Australia and at Vogue Financial Solutions, it’s our goal to find the right loan product that will meet your financial and investment property needs. Choosing the right loan type is important and our professional staff will discuss you options with you, some of which may include:
Fixed rate loans: If you want assurance of knowing what the payment on your investment property is going to be every month throughout the term of the loan, a fixed rate loan may be the right fit for you. The interest rate on a fixed rate loan stays the same rather than going up or down with the market. If you’re on a fixed income, uncertain that you could maintain higher payments if the interest rate goes up or you plan on owning the residential investment property for a long period of time, a fixed rate can provide peace of mind.
Variable rate loans: With a standard variable rate loan for your investment property, the interest rate fluctuates with the market. This means that your interest rate may decrease or increase at certain intervals over the life of the loan. There are numerous loan options to choose from with standard variable rate loans, making it a good choice for those who want to find a finance option for their investment property that will provide flexibility in loan terms and features.
Interest only loans: One of the most sought after loan types for purchasing an investment property is the interest only loan. With an interest only loan, payments made will only be used to pay down the interest portion of the loan. This type of loan is popular because interest only payments are typically lower than payments associated with loans that include both interest and principal. In addition, since the residential investment owner is only paying interest, it may provide the opportunity for additional tax breaks.
Loans that do not require a deposit: Another popular type of loan product for financing an investment property is a no-deposit loan. No deposit loans do not require that the investment property buyer puts a deposit down in order to finance the property.
When you’ve decided that investing in residential property is right for you, we will discuss the different types of loan options with you in further detail. Vogue Financial Solutions has a vast network of lenders, which means that we can match your specific residential investment property financing needs to a loan product with the features and options that you’re looking for.
Investment Property Planning
As with any investment type, there are fees and costs involved. A few of the common fees that are associated with purchasing an investment property include:
- Legal fees
- Search fees
- Stamp duty fees
Another part of planning to finance your investment property is determining how much you’re going to save up for a deposit and how you’re going to accomplish meeting that saving’s goal. While requirements will vary from investor to investor, being able to make a deposit reduces the total amount that you will have to finance, which may potentially result in achieving a higher level of equity in the property, which is especially beneficial if you are planning to sell the investment property at any point in the future.
An additional consideration is making sure that you perform adequate research on the investment property that you’re interested in purchasing. Location, school ratings, the job market and other various factors can all play a role in how well your investment property performs for you.
You don’t have to wait until you’ve found the perfect property to start planning or to start researching what financing options may be available to you to help you purchase your investment property. If you’ve made the decision or even if you’re thinking about investing in residential property, the sooner you start planning and the sooner you start the process of checking into your financing options, the more prepared you will be when you’ve found the right property for you to make your investment in.
With so many different residential investment property loan products available, it’s important to have a team of professionals on your side that can help you sort through all of the different options so that you choose a product that’s right for your situation. The options and requirements may seem overwhelming, but with the right amount of planning and having the knowledge that you need, obtaining the financing that you require for your residential investment property doesn’t have to be complicated or time consuming. Let the dedicated team at Vogue Financial Solutions help you achieve your dream of owning an investment property.