Buying real estate – especially a real estate investment – is almost always a stressful experience. From submitting the offer to the day of closing, there are lots of inspections to happen, documents to provide, and paperwork to fill out. If you’re buying an investment property on your own, there’s a good chance you’ll interact with agents from Professionals real estate. It is one of the most well-known real estate brokerages in Australia, and it’s highly respected.
Although the process of buying an investment property can be stressful (whether through Professionals real estate or elsewhere), there are a few ways you can minimize the problems and make the process smoother.
Gather All Documentation You Will Need Before Discussing With Professionals Real Estate
Since you will be asking for a sizable loan that has risk associated with it (if, for example, you cannot find tenants), the bank will require significant documentation to process the mortgage. They’ll ask you for pay stubs, assets, liabilities, and so forth to determine your ability to pay the mortgage. If you have other properties already rented, you should gather those leases and cheques as well. You should gather all this documentation before looking at investment properties.
Remember that banks consider real estate investments to be higher-risk than mortgages for owner-occupied properties. The bank’s logic is that, in times of financial distress, the owner will focus most of his or her resources on saving their primary home instead of the investment one.
See If You Can Have 20% As A Down Payment
Most Australian banks will let you buy an investment property with as little as 5% down. However, if you only put 5% down, you will have to pay the lender’s mortgage insurance (LMI), and that is not cheap. If you’re renting out the property, LMI alone could take a significant chunk out of your profit!
Therefore, it’s advisable to put 20% down, if possible. You’ll avoid LMI this way, and it will result in a lower monthly payment. There also tends to be less scrutiny with banks if you have at least 20% down.
Lower Any Existing Debts
If you carry credit card balances or are planning on making a big purchase, you could face significant scrutiny when applying for a mortgage after you put in an offer with your Professionals real estate agent. These balances will make it harder for a bank to approve the loan request.
Therefore, before buying a real estate investment property, try to lower your credit card utilization as much as possible. By doing so, you’ll have a higher chance of getting a loan from the bank. You will also face less scrutiny in the process.
Make Getting Your Investment As Easy As Possible!
Whether you buy your property through a brokerage like Professionals real estate or you invest in some other way, the goal of real estate investing should be to maximize your returns while minimizing your time investment.
At Australian Property Investments, we’re always happy to discuss investment ideas and strategies. If you’re looking at buying an investment property, consider getting in touch with us today. We can make the process as painless as possible!
