With the RBA’s recent reduction of the cash rate to 2.5%, one of the lowest seen in modern times, the current marketplace presents property investors with a golden opportunity to both grow their portfolio and increase existing returns.
Here are three tips for every day property investors on how they can maximise the current interest rate climate.
Maximise your existing ROI
Take immediate advantage of the current low rate environment to reduce your payments on existing property.
Securing a lower rate will increase ROI on existing positive cash flow property and could also be the decisive factor that could turn your negative or neutral investments positive.
The easiest way to address this is to assess your options with your current lender. Negotiating a better rate with your existing loan provider is not only more convenient, but also means you avoid the various costs incurred with a new lender such as application, settlement and valuation fees. Ideally your starting point should be with a finance broker who understands your strategy and desired investment goals. Securing a well negotiated interest rate now has the potential to pay valuable dividends for years to come.
Select property based on market factors
The very basis of positive property investing and ROI achieved is based on the gross return of your property versus the net holding costs to service the investment. Naturally, a lower interest rate environment offers ideal conditions for investors to maximise cashflow returns.
In many positive property locations around Australia, investment homes returning over 9% PA are putting tens of thousands of dollars in their owners pockets. – http://www.crawfordrealty.com.au/property-for-sale
Regardless of where you invest, it is still important to ensure you lock in the best rate possible. Do your research and consider using a broker.
An experienced broker will assess your financial situation, understand your investment goals and do the shopping for you by comparing the rates on offer from their panel of lenders – generally all major banks and lenders in the region.
This will ensure you put yourself in the best position possible to maximise your investment properties’ cash flow.
Time to buy
The current market is creating excellent investment conditions.
Lower interest rates are having a positive impact on affordability which is now better than it has been for a number of years.
Low rates look likely to continue for some time and most economists are forecasting steady growth across national property markets in the coming years thanks to the actions of the RBA.
Overall housing markets are showing a promise of better times and are offering good rates of return for the level of risk they are presenting. In fact, they are presenting diminishing levels of risk for the investor as rentals increase and the potential for negative growth abates – John Edwards founder of Residex Pty Ltd.
Keep in mind low rates won’t last forever.
Investors should take action to maximise both their buying position and investment strategy to plan for the future before rates begin to rise again.
The post 3 tips on how to maximise your ROI with current interest rates appeared first on Crawford Realty.
