Series 1 of 7; Series 1:Understanding your current financial situation prior to investing in property: Part 2.
I believe you must engage a Buyers Agent with every property purchase, Using a Buyers Agents/Buyers Advocate and Property Advisor is key to more property investment success. These are extracts from my latest book “The Australia Property Investment Handbook 2018-2019”. In all good book stores now.
con’t from part 1……..
Once you have a goal, you need to consider your current situation. There is no point having a goal that is completely unachievable. What is achievable can often be more than what you might think, though, if you have a good team around you.
Your income will determine how much you can borrow. It also forms part of what you can afford to spend and save, and it impacts on what you can contribute to an investment property.
Assets and Liabilities:
The amount of debt you have will also impact on what you can borrow. The more credit cards you have, the worse off your borrowing capacity is.
This will impact on your ability to obtain a loan, especially if you are over 55. The main impact from a property perspective
is that it will directly impact how much time you have left to work and to achieve your ‘passive income’ goal for retirement.
It will also impact on the viable length of the plan moving forward, and the level of risk appropriate for your situation.
Your living expenses:
This impacts on the level of debt you can afford, your borrowing capacity, and the amount you can save. Lenders are
placing an ever-increasing significance on this. In fact, besides your income, this is one of the greatest variables, and every
lender treats your living expenses differently.
Your surplus/spare money:
This will contribute to what the plan needs to look like, and what is possibly achievable. If you need to purchase a capital
growth focused property, then often by default it will be negatively geared, and you would need to afford the higher
out-of-pocket cost. The Government has now intentionally made it more difficult for you to afford to buy an established
property, given you can no longer claim any depreciation on any fixtures and fittings that came with the property.
Risk Profile and appetite is next and this will be covered in the next blog. It is a longer section and requires its own space.