For the younger audience who wishes to dip their toe into real estate investments, this first home investment strategy could help you accumulate equity in real estate while providing a flexible lifestyle that the younger generation seeks and desires.
Investors are now buying their first home as an investment property in more affordable areas and renting them out to receive a rental income. This strategy usually involves medium-sized suburban houses that can accommodate a family, generating more attractive rental returns than apartments or units in the CBD for similar initial capital outlay.
The investors should preferably seek a rental accommodation closer to their workplace at a lower price than their rental income. This way, the rental income and cost difference will contribute to your mortgage obligations, accumulating equity in the real estate they own. At the same time, the investor enjoys the flexible lifestyle renting provides. If the rental income to cost difference and an offset account can reduce or offset the interest portion of your mortgage payment. Your mortgage contribution each month will be primarily contributed as stored equity within your real estate. In the long run, this equity can enable the investor to invest in other real estate investment opportunities by using equity cash-out as deposits for the new real estate investment to leverage multiple mortgages to amplify their real estate investment returns.
To execute this strategy, the investor should apply for a fixed-rate principal + interest mortgage for investment with features such as offset accounts or redraws. This way, investors can minimise the amount of interest paid and maximise accumulated stored equity.
Contact us for more information and tailor your investment strategy to your financial situation.
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