Mortgage brokers who process home loans in Baldivis, Kwinana and elsewhere in the Rockingham area are a bit perplexed by some recent media reports. Reading newspapers, magazines or some Internet sources, one would think that a “lack of confidence” among investors and consumers alike has had a negative effect on the property market.
However, contrary to what many in the media are saying, we are not seeing any lack of confidence from consumers or investors when it comes to the property market. In fact, there is much activity in the property market, especially in the investment sector.
The current unique combination of factors, including the historically low RBA interest rate and increasing rental returns, has spawned a positive environment for investing. Due to variable interest rates as low as 5% per annum, it has become quite easy for investors to find positive geared cash flow properties that virtually pay for themselves.
Since late 2010, variable interest rates have decreased by around 2.2% per annum. On a $300,000 mortgage, this speaks for interest savings of close to $6,000 per annum.
Another big factor for increased property market activity is the decision to allow Australians to invest their Self-Managed Superannuation Funds in property. While no broker can ever guarantee that any investment strategy will work, due to unforeseen changes in the economy, early feedback indicates that using one’s super for investment properties is a very solid strategy if done right and could possibly be the best chance to really build a large retirement fund for many.
The best possible way to do this is to insist on investing only in cash flow positive properties. This refers to a property that produces more money each month than the owner pays in expenses. This means that, after the down payment is taken care of, the property is not only paying for itself but turning a profit to the owner.
The basics of how to buy a property are as follows. The most important requirement is to buy in a neighbourhood that is primed for growth. This means that your property values will rise. Then, it’s just a matter of negotiating prices.
Call us on (08) 9527 1800 to discuss the idea of investing in a positive cash flow property.