Property is a hot market right now, and tons of Australians are making a fortune (or close to it) by investing in land over the long-term. The problem is, so many people still don’t know how to finance property investments the right way and refuse to seek out the answers for themselves, or worse, they make the same mistakes that cost others precious time and money.
I want to save you some time and trouble today with this guide. By the end of this article, you should know exactly what you need to do to finance property investments the right way, and you’ll have no excuse not to get started.
Put Down a Big Down Payment
This is the most obvious way to finance a property investment. The more that you can put down initially, the smaller your loan will be. It also shows that you have the cash to cover the loan payments. If you can afford to put down $20,000 on the property, then you shouldn’t have a problem paying a few hundred dollars on a loan each month. Sounds simple, right? This is maybe the best tip to get started investing in property, but some might not want to shell out the big bucks just yet or might now have it to spare. Don’t worry; there are a few other options.
Improve Your Credit Score
Want banks to look at you as a trustworthy borrower? The number one tool that they use to determine this is the credit score. That’s right, you could look incredibly shady, but if your credit score is above 740, the bank will be more than willing to shell out a few thousand with low-interest rates because of that magic number. Even if you’re not going the bank loan route, you should still work towards improving your credit score. It affects tons of areas of your financial life.
Getting a loan from the bank can be an excellent option for many people with outstanding credit scores, but if yours is below 740, you’re going to pay in interest.
Try to Avoid Big Banks
You might think that getting a loan from a huge, national bank might be the best choice. While it does have some perks, here’s the reason I wouldn’t recommend it to everyone: local banks are more flexible, and prefer local investments.
The mega financial institutions are all about dollars, cents, and numbers on spreadsheets. They’re stricter in who they approve, and if you don’t have the credit score or down payment the lender requires, they’ll probably turn you down.
Local banks, on the other hand, are more supportive of the community and will offer more flexible terms in the interest of community investment.
There isn’t one wrong or right way to finance property, and beyond banks and down payments, there are a few other ways that you can finance property. One of my favourite ways is through a Self-Managed Super Fund that leverages the buying power of a group. Check out my recent blog post to learn more about this method.
Learn More About How To Finance Property Investments
Do you want to find out the best option for you? Schedule an appointment with Adpen today, and we’ll help you get started investing in property!