You may be a new investor looking to start your portfolio or a seasoned campaigner needing to tighten the rains on your existing portfolio. In this blog, Scott and Ross Le Quesne, directors of Parramatta and Rouse Hill Aussie and Mortgage Brokers give us their top tips that can make a huge difference in the income your property portfolio produces.
Here are some tips for existing investors:
- Review your rates
This can make a significant difference in your property portfolio cash flow. With so many different interest rate options (owner occupier vs investor rates, principal and interest vs interest only lending) it has never been more important to sit down with your mortgage broker and go through your rates. “Recently we had a client and we were able to save 0.8% of the interest and on a $1 million loan this is a saving of $8,000 per year”, says Ross.
- Note when your interest only period (s) expire
“We are finding that with a lot of our clients their interest only periods will expire in the next two to three years so now is the time to start creating those cash buffers”. On a $1 million of borrowing this is going to increase their repayments by $1700 per month”, says Ross. Subsequently, ensuring a cash flow buffer within your property portfolio will help to eliminate the stress once the interest free period finishes.
3. Review the rents
Is there any opportunity to increase your rents? Can you add a granny flat? As an investor, be active in managing your properties. Manage your managing agent. If your property becomes vacant, stay on your property manager to get the tenant in as soon as possible.
4. Don’t be set on just the big banks
The way that serviceability is calculated is very much consistent across the major banks. “What we have found is that for some people where cash flow is tight, we have been able to extent the interest free period by five years by simply refinancing with second tier lenders”, says Ross.
If you are a new investor, here are some helpful tips to get you started faster:
Get your budget in order. Look at your spending and “clean it up”. Banks are taking a closer look at living expenses as this can significantly impact your serviceability.
2. Review any other loans/credit cards you have
If you have any credit card limits that you are not using, get rid of them. Make sure your repayment history on all your credit cards is up to date. Even if you are paying off the minimum repayment required each month with an intention to eventually clear it, do so regularly.
Due to comprehensive credit reporting coming into place, your repayment history will be available for the past 24 months. Most importantly, getting your consumer debt down is a big factor in being able to borrow and grow your property portfolio.
Certainly savings trail is always helpful. So how are you going to come up with a deposit for your next property? Will it be your savings, a gift from mum and dad or equity in an existing property? Have a plan and stick to it. When unexpected expenses come up, that’s ok. Just go back to your savings plan as soon as you can.
Therefore having an experiences Mortgage Broker on your team is paramount to your property investing success. Call Scott or Ross today on 9687 1833, make that appointment to see them and make this your best year of property investing yet.
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