Investment Mortgage Broker

An investment mortgage broker is professional who acts as an intermediary between loan customers and the lending institutions who offer their mortgage products (as per a regular mortgage broker), however, in this case an investment mortgage broker specialises in appropriate lending finance for those buyers seeking to purchase an investment property.

A specialist investment mortgage broker can add value to your investment property purchase because they continuously keep up to date with ever changing details of the vast and sometime complicated range of finance options currently available for investment property buyers. An investment mortgage broker will have a good understanding of the criteria on which lenders will assess investment property finance application and will have an understanding of possible future directions in the marketplace.

By using an investment mortgage broker you should be confident that he or she knows and understands the range of finance options best suited for purchasing and getting the best value out of your investment property. Employing this specialist and up to the minute knowledge can save you not only time, but also help make the often difficult process of searching for and getting approved for the right loan a whole lot smoother.

Using an investment mortgage broker would also be a good option for first home buyers who may be on a limited budget and may benefit from viewing their first home purchase an initial step towards building an investment property portfolio, ie a first home will not necessarily be the home you end up in for the long term, it may be just a stepping stone towards future financial security through property investment.

If you are planning to purchase an investment property you should consider the following:

Take the emotion out

When buying an investment property you should treat it as a business decision and not be emotional. A common mistake is that people buy a house they would want to live in, your tastes may not be the same as your tenants, at the end of the day you want a property that generates a cashflow and appreciates in value.

What is your strategy?

Not all properties have good rental return or capital. Determine what your strategy is. Is it negative gearing, positive cashflow or/and capital growth that you are after, make sure you know before you start.

Research

Research the area you are keen to invest in. Check out future development plans with the local council, investigate the capital growth over the last 12 months, five years, ten years, demographics, predicted growth rates and the potential rental income.

Legal advice

Sound legal advice will ensure that the contract is fully examined and approved and that any changes are allowable. A good solicitor should be an integral part of your investment strategy.

Obtain professional property management services

Professional property management frees you from dealing with tenant issues and helps you keep your distance. Your property manager will be up-to-date with changes to the Residential Tenancies Act, can negotiate on your behalf and is in a position to obtain credit checks on potential tenants.

Tax Implications

Any income generated by the property will be assessed for tax. Any interest you pay on your loan, depreciation, or maintenance can usually be offset against the income and therefore lower the amount of tax being paid. If the property is not your primary residence at the time of sale you will be assessed on any capital gain. Capital gain is the difference between the 'cost base' and sale price. (The cost base is the price you paid for the property along with any expenses when buying and capital improvements made during ownership.)

Location

Homes close to CBD have historically experienced the greatest rate of capital appreciation. However, this growth can vary dramatically from suburb to suburb. Areas become trendy or have greater accessibility to better public transport and highways. Major infrastructure can open up an entire 'new' area and it can experience a major growth spurt.  Buy the worse house in the best street. Certain areas are popular and trendy and usually always will be however there are no guarantees. Do your research and understand what motivates the market and what is influencing the area you are looking in.

Aspect

The best aspect is a north east facing block that will receive the north sun in winter. Level blocks generally bring a higher price as occupants have little or no difficulties getting up stairs etc. Building costs are usually higher with awkward blocks.

Occupancy

Different suburbs have different occupancy rates to others and some blocks of units will also have different rates to others. Call agents in the area as if you were looking to rent and check the availability and cost of renting in the area. If there are a large number of vacancies it might be better to choose another location.

Tenants

Good tenants can be hard to find. Good tenants on a long lease will help your cashfllow. If the property you are considering has an unstable tenancy record find out why.