Hervey Bay Property Investment: What Buyers & Investors Need to Know

So they've got their first home.

We'll go to the next stage.

So how do they get past that first home to become a successful investor? How do they start building their property portfolio? What's the step if they've got their own home? What do they talk to you about to get to the next stage? Yeah, sure.

Well, So I suppose, you know, buying that first home, it depends what it is, but it's trying to build equity or savings that's sitting in, you know, can be sitting in an offset account.

Now, I'm trying not to get too heavy because there's a lot of different strategies.

If it's a person who comes in and they're, you know, straight up saying it's our first home but we want to, you know, continue to invest, you know, the structure might be set up slightly differently to someone who's, low risk profile, says we just want to get this property and then we'll see how we're going.

But I guess the key thing is to build up either equity or cash deposit for the next property.

And equity is the difference between the purchase or the value of the property minus the loan that you have over it.

And building in equity and the ways that that can happen is paying extra repayments Capital growth, if you've bought in an area that there's going to be consistent capital growth.

Or other ways are manufacturing growth in the property.

Now, that could be turning a two-bedroom into a three-bedroom, landscaping, improving the facade, upgrading a bathroom or a kitchen.

So there's many ways that you can, if you've got the capacity or the skill set to be able to increase the equity in the property, that can then be used as the deposit for the next one.

So, you know, nothing happens overnight generally.

I mean, if anyone that's bought over the COVID period have had, you know, massive equity increases.

So, you know, that's given a lot of people the ability to, if they've got the servicing on the other side, to buy or continue to invest.

You know, it's been a great time.

So I suppose on that, equity is one thing and then borrowing capacity is another thing.

So when you look to buy the next property, the rental income from the next property is used for capacity.

But you also have to constantly sort of be aware that you need a good income and to be focusing on increasing your income and reducing your expenses because there's, you know, when it comes down to it, there's fundamentals of how you can do that.

So if you've got an investment property, it's usually going to be negative geared or have losing money because it's probably returning 3% or 4% and your borrowing is higher than that.

Do you try and factor in a few interest rate rises in their capacity or, you know, because people go to limit and all of a sudden we get one or two interest rate rise and everybody's going, I'm overcommitted.

Yes,

yes, of course.

So I guess every calculation with mainstream lenders is buffered by about 3%.

3%.