Buying an investment property can be a great way to secure your financial future. There are many benefits to investment property, including the potential for capital growth, rental income and tax advantages. 

However, it’s important to do your research and seek professional advice from experts (i.e., finance broker Australia) before making any investment decisions. This guide covers the basic investment property how to’s, and answers questions like how to buy investment property and so on. 

So if you’re keen to find out more, read on!

What is investment property?

An investment is when you buy something with the goal of making a profit in the future. You can use a property for:

  • Wealth generation
  • Rental return
  • Increase asset position
  • Diversify income streams

What are the available loans for Sydney property investment?

There are several loans available for Sydney property investment. Each loan has its own terms and conditions. Talk to a finance broker specialist to know how these loan types align with your financial health and goals.

Variable rate loans reflect the movement of the cash rate as decided by the Reserve Bank of Australia (RBA). They offer flexibility by letting you make extra repayments.

Fixed rate loans charge the same amount of interest over a fixed period. Once the period ends, your loan defaults back to variable rate unless you lock in on a new fixed rate.

Split rate loans is a hybrid loan type that offers both variable and fixed rate features.

Interest only loans delay the repayment of the borrowed amount or principal for a fixed period. During this period you will only be required to pay the interest of your loan. Once the term ends you will begin paying both the principal and interest.

Principal and interest loans make you pay both the principal and interest and lets you chip away at the balance owing right from the start.

Are there other charges associated with property investment in Sydney?

There are many costs associated with an investment property, e.g., management and maintenance. Below are expenses you can well expect: 

  • Council rates
  • Repair costs
  • Insurance 
  • Property manager/agent fees
  • Various entry and exit fees
  • Valuations
  • Stamp duty
  • Legal fees
  • Conveyancing costs
  • Transferring property title
  • Administration fees
  • Establishment fees
  • Discharge dees
  • Lenders mortgage insurance

How much can I borrow for an investment property?

Most lenders are willing to lend up to 80% of the property price. You can borrow up to 95% if you are in a strong financial position. If you have a guarantor, you can even borrow 100% or 105% of the property price!

How much deposit do I need for investment property?

Typically you will need a 20% deposit. If you have less than 20%, you can take out Lenders Mortgage Insurance.

How to buy property for investment?

Here is a simple outline on how to buy an investment property:

  1. Seek the advice and assistance of a finance broker.
  2. Prepare the required documentation.
  3. Talk to your accountant to understand the tax implications of buying an investment property (e.g., negative gearing, budget verification, paperwork).
  4. Work on getting conditional pre-approval.
  5. Find a conveyancer or lawyer to handle the purchase process on your behalf.
  6. Start researching property.
  7. Shop around for the right loan (with the help of your mortgage broker).
  8. Settle and decide between managing your own property or engaging with a property manager.

What are the best places to buy property for investment in Sydney?

We have put together a list of the best suburbs to invest in Sydney for 2022 and beyond in a separate article. In that guide, we have put the latest data on how the Sydney housing market performed in 2021 as well as expert insight on how the Sydney housing market will perform in 2022. Read the article here.

What tax benefits are there?

here’s a host of benefits associated with tax on investment property. Costs involved with owning one can be tax deductible. Negative gearing allows investors to use the losses incurred when income from the investment is less than its expenses as a tax deduction against their other income.

For more information around property investing and tax, book an appointment with our expert finance broker.

Get started with the best finance broker at Stryve

If you’re thinking of starting your investment property journey, be sure to speak to the best finance broker around. At Stryve, we have a team of experts who can help make the process as smooth and stress-free as possible for you. We understand that this may be a big decision, so don’t hesitate to contact us today for an advice on where to start and what financing options are available to you. 

With our help, you can achieve your investment goals sooner than you thought possible!