Ready to Invest? How to Ready Your Finances for Purchasing a Rental Property

A lot of people are very keen on investing in tangible assets that will benefit them over the long term. One such long term investment is purchasing an investment property (aka rental property). 

If you’re a first-time property investor, it’s all the more crucial that you back yourself with the right knowledge and advice, to ensure you’re making the right decisions. 

This includes taking a long hard look at your current finances, to see if it’s viable now, or in the future. 

Are you interested in investing? 

Read more from the Perth property management experts at Thought Leaders Real Estate for your beginner’s guide. 

Deposit tactics 

Just like buying a house as your primary residence, lenders will (in most cases) require a 10% deposit of the purchase price. Putting down 10% only will attract Lenders Mortgage Insurance (LMI), aka added fees that need to be factored into your finances. 

There’s many ways you could acquire and put down a deposit on a rental property.  

Let’s explore them below: 

Savings 

It requires perseverance, consistency and budgeting, but it’s how the average Australian saves for their home, investment property, holidays and much more. 

Using home equity 

Imagine buying your home for $500,000 and getting a mortgage of $400,000. In the next 3 years, your home is valued at $600,000, so your mortgage is only $350,000.  

This is a popular way for new investors to raise the necessary deposit for their first investment property. 

Self-Managed Super Fund (SMSF) 

This is an option for those of us who’ve been in the workforce for quite some time. However, expect a higher deposit amount of 20%, 30% or even more. 

Parental gifts (loans) or inheritance 

Financial gifts from your parents or gaining an inheritance as a lump sum is a helpful way to put down a deposit. However, it’s not something most people can rely on. 

Talk to a Perth real estate agency you can trust to take a look at properties within your envisaged price range. 

What else can you do? 

Now it’s time to impress your lenders with your financial habits.  

Here’s how: 

• Pay all of your debts on time and try to reduce credit card debts and personal loans. 
• Be sensible with your purchases (as in, no ATM withdrawals from a casino 5 days a week). 
• Stick to a living expenses budget and avoid making big purchase 90 days before seeking a loan. 
• Avoid buy now, pay later gimmicks. 

You will find that purchasing an investment property is somewhat similar to buying a home for yourself. With some commitment, the above is definitely achievable. With professional property management in Perth, you can see real return on investment. 

The Perth property management specialists 

Thought Leaders Real Estate is a Perth real estate agency you can rely on to find the investment property of your dreams. We have consistently and carefully matched buyers, investors and tenants to the right Perth property for their needs. 

Need property management in Perth?  

Contact Thought Leaders Real Estate for professional and proficient management of your investment property.