What you need to know before buying your second property

Australians love property, and it’s not difficult to see why. Property is seen as a secure, long-term and low-risk investment with clear financial returns.

Indeed, in 2016 total returns from property in Australian capital cities was 7.5%.

But buying a second property is different to your first, with a new set of challenges and opportunities. What do you need to think about?

Pick the right property at the right price

An investment property is only a good investment if it delivers you a return, so when selecting a place to buy, you need to be confident it will increase in value.

Research the neighbourhood to get an understanding of current price trends, and to see what’s on the cards – roadworks, public transport changes, business or residential developments – which could affect its value in the future.

You should also consider how attractive the property will be to renters, as any time it’s vacant will cost you.

Look for a place that is ready to lease, unless you want to shell out for major renovations.

Make sure you really have the cash

This might feel like a no-brainer, but if you aren’t certain you’ll have the rental income or another form of cash to service your second mortgage, you risk having to sell the property before it’s suitably increased in value.

You also need to be sure you have enough money left over to reach your other important short and medium-term financial goals, such as paying off a loan or investing in education.

Get a good property manager

A good property manager can save you a lot of headaches and, ultimately, money.

Your property manager should be able to provide you with advice on legal matters relating to the property, troubleshoot any issues with tenants, and advise you on your responsibilities as a landlord.

Importantly, they should also be able to advise you on when you should and shouldn’t increase your rental terms, help you stay on top of the changing market and make sure you’re not missing any additional income.

Look for affordable mortgage options

Looking for one of the cheapest investment home loan rates in the market? Homestar Finance, a Canstar 2018 Award winner, is offering an Investment Property Interest Only home loan rate of only 4.15% p.a with a comparison rate of 4.19 p.a%! A 100% offset account and redraw facility is also provided. This offer is only available for a limited time only- find out more about their offer here: http://homestarfinance.com.au/products/investmentpropertyhomeloan