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Speaking to Broker Daily, financial advisor and Money for Life author Helen Baker said there are a variety of ways Aussies can leverage property to drive greater income.
“If you have equity in your home, this means your home is worth more than you owe, this gap is called equity. You can talk to your mortgage broker/bank about how much of this equity you can use to invest – sometimes you can borrow up to 100 per cent, sometimes 85 per cent, it will depend on the lender and your total financial position,” Baker said.
“Once you know the amount available to you, then talk to a financial adviser about whether you should invest all of that, or some of that, and what are the options relevant to your goals and financial situations that you should invest in as well as what structure you invest in. These funds invested will hopefully exceed your loan amount and provide additional income.”
There are plenty of options available to home owners to boost income, she said. This includes:
- Increasing rent that is surplus to loans and costs.
- Renting out rooms.
- Considering Airbnb while you are travelling or if you spend time at your partner’s/family home.
- Creating a granny flat.
- Rent out the garage for storage or land space for car parking for commuters.
Entering the property market can be difficult. There are key pitfalls to avoid beginning on the wrong foot, said Baker, such as:
- Not taking advantage of first home buyers strategy using superannuation that stretches your money/deposit further.
- Getting in over your head with debt.
- Not having a backup plan if job or health changes impact your ability to stay on track.
First home buyers may also be tossing up whether to buy for investment or occupier purposes. What’s best depends on a variety of factors.
Baker said: “It largely depends on your goals and current and future financial position. Do you already have a home and you are upgrading/downsizing? Are you wanting your own home to live in now? Or are you happy where you are and looking to invest in an additional asset for building your wealth, or wanting to purchase something you want to live in in the future?
“Once you know your ‘why’ you are looking to purchase you can consider the financial side of things. What is your excess cash flow/affordability? Is that likely to increase or decrease in the future? Are you planning to have children soon and go to one income? Or retire? How safe is your job? What is your backup plan if you buy your own or the investment should anything change in your circumstances?”
