When you're ready to invest in real estate, understanding the different investment property types available can help you make informed decisions about your property investment strategy. Each property type offers unique advantages and considerations that can impact your rental yield, loan amount requirements, and overall investment returns.
Stand Alone Dwellings
Stand alone dwelling properties remain popular choices for investors across the Central West Region. These properties typically offer:
• Higher rental yields in regional markets
• Potential for capital growth
• Appeal to families seeking rental accommodation
• Land ownership providing additional security
When buying an investment property of this type, lenders often view them favourably due to their broad market appeal. Your borrowing capacity may be enhanced when purchasing established homes, and many lenders offer attractive investment loan options for these properties.
Units and Apartments
Apartments represent another viable option when buying a rental property. These properties often require lower initial loan amounts compared to houses, making them accessible for your first investment property purchase.
Key considerations for apartment investments include:
• Lower entry costs and stamp duty
• Potentially higher rental yields per square metre
• Body corporate fees affecting overall returns
• Location proximity to employment centres
The application process for apartment loans may require additional documentation regarding body corporate finances and building reports.
Town Houses
Town house investments offer a middle ground between apartments and stand alone dwellings. These properties can provide solid rental income while maintaining lower maintenance responsibilities compared to houses with large yards.
Lenders typically assess town house applications similarly to apartment loans, considering factors such as:
• Body corporate arrangements
• Construction quality and age
• Local property market conditions
• Your investment property portfolio diversity
Ready to get started?
Book a chat with a Mortgage Broker at Dubbo Mortgage Brokers today.
Understanding Investment Loan Features
When applying for an investment loan, several key features affect your borrowing experience:
Interest Rate Options
You can typically choose between variable interest rate and fixed interest rate options. Variable rates may offer interest rate discounts during promotional periods, while fixed rates provide certainty for calculating investment loan repayments.
Loan to Value Ratio Considerations
Most investment loans require a lower LVR compared to owner-occupier loans. This means you'll typically need a larger deposit, and lenders mortgage insurance (LMI) may apply if your deposit is below certain thresholds.
Rental Income Assessment
Lenders typically assess rental income at 70-80% of market rent when calculating your borrowing capacity. This conservative approach helps ensure you can service the loan during vacancy periods.
The Investment Loan Application Process
A streamlined application process begins with gathering required documentation:
• Recent bank statements
• Tax returns and income verification
• Property research and purchase contracts
• Rental appraisals or property management agreements
Your investment loan application will be assessed based on your overall financial position, including existing debts, income stability, and the proposed property's rental potential.
Property Investment Strategy Considerations
Successful property investment requires careful planning around:
Negative Gearing Benefits
Many investment properties initially operate at a loss, with rental income below total expenses including loan repayments. This negative gearing can provide tax advantages while building long-term wealth.
Location Research
Thoroughly research property locations, considering factors such as:
• Employment opportunities and population growth
• Infrastructure development plans
• Rental demand and vacancy rates
• Local amenities and transport links
Working with Mortgage Brokers
Experienced mortgage brokers can access investment loan options from banks and lenders across Australia, helping you compare:
• Investment loan interest rates
• Loan features and flexibility
• Application requirements and processing times
• Ongoing account management options
Professional guidance becomes particularly valuable when building an investment property portfolio, as loan structuring can significantly impact your tax position and borrowing capacity for future purchases.
Whether you're purchasing your first investment property or expanding an existing portfolio, understanding the different property types and their financing requirements helps you make informed decisions aligned with your investment goals.
Call one of our team or book an appointment at a time that works for you to discuss your investment property loan options and develop a strategy suited to your financial situation.
