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Starting as a Property Investor

Perhaps you have asked yourself exactly how some people find a way to purchase real estate?

This article is aimed at helping people who are starting as a property investor.

Generally speaking, Australia is a country of  ‘home owners’.  70% of all Australians either own their house outright, or have a home loan.  For many Australians, the dream of owning their very own home can be a major aim.  Consequently, people put all their cash into paying down their home loan.

Over time, home values improve and their debt decreases.  The difference between what is owed to the bank and the value of the house, is known as equity.  In 2005-06, an ABS questionnaire discovered the majority of homeowners have an average of $100,000 in equity available to them.  Obviously many Australians have  much more .

One common misconception around real estate investing, is the belief that you need cash deposits for an investment property.  It is possible for homeowners to make use of  the equity in their own home as a deposit.  The balance of the purchase price can be obtained using a loan.

It works something like this.

Assume an investor would like to buy an investment property for $300,000.  They could borrow $60,000 against their existing equity and $240,000 against the new investment property.  They would be wise to borrow slightly more from their equity to cover extra purchase costs, such as stamp duty and solicitors fees.  Many investors also put in place some extra funds from the equity to cover any unknown contingencies for the future.

The establishment of the loan structure can be organised by a broker and we are more than happy to discuss the strategies involved.

The combination of rental income and tax savings, make purchasing real estate relatively affordable for regular Australians.

Starting as a property investor may not be as hard as you may think. This is especially the case if you have some equity you can use.

Enquiries about real estate investment may be sent to info@eosproperty.com.au