GETTING STARTED IN INVESTMENT PROPERTY
Maybe you’re wondering: “How can we buy our first rental property? Where do we start? How do we become property investors?” The four keys are:
- Sufficient equity
- Sufficient income
- Find the right property
- Get the right accounting structures
Equity means how much you have. To work this out, if you own your own home (which is an asset), deduct the amount of the mortgage from the value of your home. The result is your equity.
For example, a $600,000 home with a $400,000 mortgage means there is $200,000 equity available. See below for a simple Equity Calculator.
Income means how much you earn. The more you earn, the more likely a bank is to lend to you.
Things to consider include: Will you get a new home or an old one or go for a land/build project? What are the pros and cons of each? Where do you want to buy? What can you afford? What about “rental yield”? Click the links for more info.
Oftentimes, an LTC is the best way to go. However, there are other factors to consider: Are you single or with a partner? If you have a partner, are you both in the same tax brackets? Do you have children? Do you have a trust or are you planning to set one up? What are your long-term goals? The answers to questions like these affect what sort of ownership structure we would recommend.
SO, WHAT NOW?
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