Steps To Buying An Investment Property

An investment property is an investment property in real estate bought to make a profit on investment through rental income and the possibility of selling it back or both. The property could reside in the hands of an individual or an investment firm or a corporate entity. 

A property is positively geared if it earns an annual profit. Negative gearing in investment property may allow you to reduce the tax you pay on other income such as your regular wage or salary as the annual loss made on your rental property could reduce your overall taxable income. You can browse to know more about negative vs positive gearing. 

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Here are the steps to buying an investment property:

Step 1: Find out how much you can borrow

Getting an idea of how much you can borrow is the first step to buying an investment property. It gives you a general idea of your target price range, so you can narrow your property search within your purchase budget.

Advisor will also consider the potential rental income you will get from the investment property when calculating how much you can borrow. 

Step 2: Calculate your loan and purchase costs

As a general rule, you will need about a 5-10% deposit for an investment property purchase, however, if you have an existing property, you may be able to use your equity to cover more of the deposit. The criteria for deposits will differ between lenders. 

An adviser will help you identify which lender will best suit your investment loan needs from a wide panel of secure banks and lenders – that step really works out your costs and loan options go together.