Instead of waiting to pay off your first home, why not invest now? Property investing provides a good opportunity to build wealth, but it is not for everyone.
If you answer ‘yes’ to the following questions, chances are that investing in a property might be a good fit for you.
Do you have a high cash flow?
As long as your cash flow is high, you are in a good position to enter into property investing, even if you have little equity.
If you don’t have the available cash flow to fund the additional debt of a second property, you will find it hard to get ahead. For a lender to approve the home loan finance, they will look at whether you have a stable income that is capable of servicing two home loans on top of the cost of living.
Do you want to build wealth by property investing?
Investing while paying off your home loan has the potential to create an additional source of income and widen your opportunity to build more wealth more quickly.
Many people spend a lifetime paying off their home loan and never take advantage of the equity in their property. You can access this home equity to invest in property potentials, providing you with tax benefits and profit through rental income and capital growth.
Are you comfortable with risk?
It can be hard to find the courage to start a property investing portfolio because you fear exposing yourself to debt and risk. You can make the choice to play it safe and stay out of debt, or take the attitude that great investment opportunities warrant the risk.
There are ways to minimise risk, such as by seeking expert advice, choosing your investment property wisely and having a strong contingency plan for what to do if things go wrong. A safety buffer of 3-6 months’ worth of repayments and living expenses is an important back up if you find you can’t meet the repayments.
Answer ‘yes’ to any of the above questions? If so, give your mortgage broker a call and let them talk you through the options available for borrowing to invest in a second property.