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Submitted by: Herron Todd White
The crash of the American property market took many people by surprise, resulting in shockwaves that reached across the globe and even to Australia. However, with the world recovering, and prices still at the lower end, there is a rush to invest in property even though the interest rates are rising. To prevent being caught in the kind of situation the people who lost so much in the recession were, it s advisable to safeguard assets and to rely on instincts over general trends.
A lot of the trouble was blamed on banks too willing to lend without proper credit checks, and people too willing to overspend in the hopes that this time they d make it big. It is essential not to repeat the past, as it so often is easy to do. The Australian property market looks set to boom again, but hopefully this time around, investors will be a bit more cautious before diving straight into the shark-infested waters of debt.
Borrowing need not be a dirty word. In fact, it is an excellent way to ensure that you maximise your assets. There can be advantages to negative gearing too, as unlikely as that seems. What, then, is negative gearing? Negative gearing is what happens when you borrow money and invest it in an asset that produces an income and the cost of borrowing exceeds its income from that asset.
How can this be a good thing? Positive gearing has obvious benefits, such as a higher income, but it can also mean higher taxes on that income. The advantage of negative gearing is that the cash loss is offset against other investments you have, reducing taxes.
But how do you go about getting financing in the first place? The easiest, and most obvious way is to go to a bank or other lending organisation. If you don t like this part, it would be useful to hire professionals who will help with this aspect of the purchase.
When applying to finance a property in Australia, it is necessary to provide proof of deposit, proof of income and proof of identity, so having the documentation ready will smooth out the process considerably.
Buyer s agents frequently advise their clients on how to procure financing, and their qualified staff are able to ensure that the best possible solution is reached. When considering investment in property, this is always a handy way of ensuring that you don t have do stress too much over the funding. A suitable buyer s agent can arrange and organise the financing, so consult with one that you trust and which has the experience to back it up.
While it is exciting to think of all the returns that a property could bring, it is usually a bad idea to buy and pray , i.e., to buy a property that doesn t show any signs of value, considering it a bargain and pray that with time it will appreciate in value. Unfortunately, unless you re very very lucky, it doesn t work that way.
Protect your other assets, as in the event of any trouble a backup plan is a must-have. Consider the legal implications of any financial agreement before entering into it and the effect it would have on other assets. Make provisions to make the best use of all available resources, and you have a great chance of success. Happy hunting!
About the Author: Herron Todd White Property Advisors WA are experienced
Property Buyers’ Agents
providing property investment advice for
Perth Property Investors
in Western Australia.
Source:
isnare.com
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