Think that financing rental property is going to be difficult? Not really, if you know how!
There are many ways to skin a cat, and financing rental property is no different if you arm yourself with plenty of knowledge. Even if you think your circumstances will make it too hard, the determined investor can always find a way.
I have seen a single mother save her way to investment fortune, starting on government benefits. At one point, she was living out of a car, so she saved every penny she could (even her daughter's birthday money from her grandparents) to get a deposit for a tiny bedsit. That became the starting point for a multi-million-dollar portfolio (and her daughter got her choice of birthday presents ever after)!
I have a friend who is a writer, and I hadn't seen him for some years. He's been puttering along in his day job for years, finding time here and there to pursue his dream of making a career in writing. He told me during a Facebook chat only recently that he was going to have to move out of his flat because the landlord was raising the rent by $30 per week, and on his income, he couldn't afford it.
Straight off (and quite brazenly), I asked what he was paying, for what size place. Then I checked where he was living these days, and how long he had to commute to work. He was staggered that he could afford to buy his own place, closer to work and nearer friends, on less than what he was paying, and with his income. The next day I had some free time for him to visit, and we worked out a budget together. By the time we had finished, his concerns about a credit-card debt were gone (we'd worked out how to kill it in seven months), and the look of shock when I explained that he could own his own flat outright in twelve years on $33,000p/a was very satisfying.
He's now arranging finance, and looking to get himself a two bedroom apartment instead of the bedsit he would have had to rent. What's more, he knows he can rent out the spare room and further reduce his costs (and therefore his need to work). He also knows that once he's got this place paid off or at least paid down, he can rent it out for more than the mortgage repayments and get an income stream from that while adding another property to his portfolio in his next apartment! He is another person financing rental property using the First Home Owners Grant to get started, and it never even occurred to him that he could own property at all!
I like to see people excited and happy about their futures because of property investing!
This section is all about ways that you as an investor can get into the market, even if you didn't think you could before. When it comes to financing rental property, just about everyone will need a home loan of some sort, unless they inherit a fortune, already have a fortune built up and lying around, or get some sort of large divorce or court settlement. I suppose it's one way of looking on the bright side of some of these situations, but most of us aren't lucky enough, even to win Lotto!
We consider financing rental property using the different types of mortgage - variable rate, fixed rate, offset mortgages, refinancing your current PPOR or a specific investment property loan.
Some of you will be surprised to learn that they can invest SIPPs and their pension or superannuation funds in property, thanks to changes in government regulations over the past few years.
Loans aside, you still need a deposit. Generally...
"Money doesn't grow on trees".
It's something that my mother and father always used to say to me, and it's one of the many little examples of negative social programming that stop people from getting the finance that they need to really enjoy life.
I'm sure you know that one, and a host of others!
It's like someone saying "money isn't important to me". Unfortunately, society will disagree with you loudly if you were to load up your grocery trolley and tell the cashier or the store owner that you're not paying for your food because money's not important. They will think it's important enough to call the police!
(I should mention here that I quashed the whole money-growing-on-trees thing when hubby and I hatched a long-term plan to grow buxus hedge to sell later to woodworkers. The stuff is so hard to buy in Australia as a timber for working that a single good-sized piece of seasoned trunk can sell for thousands.)
Don't tell me (or Karl) that money doesn't grow on trees! I'll deliberately set out to prove otherwise!
We will look at some mortgage broker tips for getting a leg in the door and financing rental property, even without your own deposit. There are lots of ways to raise capital for property investing - even with an extra job that you stash the income from, for financing your rental property dreams.
Finally, there are more ideas in the Property Investing Strategies section for you to check out later. This should all help you to think laterally about financing rental property portfolios.
Whatever you do, get started because it's a great way to get on the road to financial freedom!
In this section:
Calculate Repayments before you start. You can use the First Home Owners Grant (FHOG) to invest in property! Use the First Home Saver Account to get started as well. Access the Home Buyers Assistance Account if you live in Western Australia Don't think you have enough money to start? Discover How to Budget and you'll be on track in no time! Mortgage Broker Tips to make sure you get the right deal. Find out about the Australian National Rental Affordability Scheme How do you Raise Capital for Property Investing?
Calculate Repayments before you start.
You can use the First Home Owners Grant (FHOG) to invest in property!
Use the First Home Saver Account to get started as well.
Access the Home Buyers Assistance Account if you live in Western Australia
Don't think you have enough money to start? Discover How to Budget and you'll be on track in no time!
Mortgage Broker Tips to make sure you get the right deal.
Find out about the Australian National Rental Affordability Scheme
How do you Raise Capital for Property Investing?