By Aus Investment Properties
Discover how everyday Australians are slashing 10 years or more off their Mortgage without getting a second job or changing their lifestyle!
Table Of Contents
Step 1
Do you qualify?
There are four important qualifiers to be eligible for this strategy.
You must:
If you answered yes to all these questions you are in a good position to slash years off your mortgage.
(If you are unsure of your equity position we will run through how this is calculated in step 2)
Step 2
How much equity do I have?
Most of us don’t have hundreds of thousands of dollars sitting in a bank account for a rainy day, but many of us have equity built up in our homes.
In simple terms, equity is the difference between what you bought your home for and what it is worth now.
There are some other factors at play but this is the basic concept.
To calculate your available equity follow this simple calculation
80% of current home value – Remaining Mortgage = Available equity
For this example:
Home Value = $900,000 Remaining Mortgage = $450,000
(80% x $900,000) – $450,000 = $270,000 (Available Equity)
How much available equity do you have?
Step 3
Property Selection?
Property selection is crucial to this process.
Not all properties are created equal.
If you select the wrong one you could end up in a dark financial hole for a very long time.
You need a property that is going to pay you income every week into your bank account or what we call passive income.
A cash positive property pays you every week after all expenses.
There are many costs to an investment property and miscalculating costs could easily turn the perfect investment (on paper) into a bad one.
The main costs to an investment property are:
The key is to invest in a property where the income is greater than the costs.
Income & Rent > Costs & Expenses
Step 4
How to be sure you have chosen the right property?
Don’t miss this step!
Before purchasing an investment property make sure you ask for a ‘Property Investment Analysis’ (PIA)
A PIA is a detailed analysis of the proposed investment property including costs, returns, interest rates, expected growth and projects how your property is placed over the next 1 to 20 years.
This is an essential document for any and every investment property purchase.
*At Aus Investment Properties we conduct a full complimentary ‘Property Investment Analysis’ on all our proper-ties.
“Never Buy An Investment Property Without A PIA”
Step 5
Risk Mitigation!
What happens if I can’t secure a tenant?
This is one of the most common questions we get asked?
And fair enough.
Every week your property sits empty it is costing you! How can you reduce your risk?
The answer is a ‘Rental Guarantee’
Not any rental guarantee but one that is offered by your property manager independently of the builder or sales team.
This is very important as it is not uncommon for builders to inflate the purchase price to cover the rental guarantee knowing that the property will be difficult to lease.
If your property manager isn’t willing to offer a rental guarantee proceed with caution as it shouldn’t provide you with confidence that they are going to successfully lease your property.
The last thing anyone wants is an empty investment property.
*At Aus Investement Properties, our property managers are part of the process from the start. Reviewing the site, location, plans and design to make sure the property is appropriate and ideal for leasing.
By working closely with our property managers our properties are leased fast and backed by an independent rental guarantee.
Step 6
How to cut your mortgage in half!
Knocking years off your home loan sounds like some sort of witchcraft.
But one simple strategy can do exactly that and more.
Let’s start from the top!
You and your partner both earn $55K per year ($110K).
Your home is worth $900K and you owe $450K, giving you $270K in available equity (As per Step 2) Your current home loan repayments are $550 p/week ($28,600 P/Year)
You use $150K of your available equity (not savings) to purchase a cash positive investment property. This property rents for $880 p/week and returns to you $359 p/week (After all costs)
You add this extra income to your existing home loan $550 + $359 = $909 (New weekly home loan repayment)
In this instance, these extra repayments will reduce your home loan from 24 years to 12 years Saving you 12 YEARS, $107,000 in interest and $105,000 in repayments.
That is over $200,000 that you don’t need to work for and pay to the bank.
All this without you working overtime or getting a second job.
Once your mortgage is cleared you will then be able to redirect your surplus funds towards reducing your investment loan.
You could be completely debt-free plus have income-producing assets to assist with your retirement
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SQM Research is an investment research house that specialises in providing accurate research and data to financial institutions, investment professionals and investors.
Aus investment Properties has partnered with SQM Research to provide data across our site to assist investors in making an informed decision.
Capital Growth 12 months, measures the increase in a property’s value over the previous 12 months, indicating how much the investment has appreciated in that timeframe.
Capital Growth 10-year annualised, reflects the average annual increase in a property’s value over the last decade, smoothing out short-term fluctuations to show long-term appreciation trends.
Vacancy Rate, indicates the percentage of properties that are currently unoccupied in that postcode, It’s a key indicator for investors to assess the rental demand.
SMSF Property Investing, when investing inside your SMSF there are some restrictions on how you can purchase investment properties. We use the following information to help navigate the SMSF investment property options.
This property is a single-contract property suitable for an SMSF.
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