I live in Australia and am thinking of getting an investment property and having a tenant in it. I have seen a 2 bedroom unit I like very near the railway station and a major hospital.
The current tenant has been there for 3 years and is paying $400 per month. It is an older unit but in good condition and no immediate renovations are needed.
What is your opinion on buying properties for investment? Depending on the length of the loan I take out, the tenant could cover most or all of the monthly payments.
Renter Pays Interest Only for Home Mortgage
I was thinking of taking a long loan period and letting the tenant pay the interest. Then I would work to pay the principal off out of my earnings as quickly as possible. The unit is $340,000. I am 47 years old, own my own home, and work part time as a registered nurse earning about $60,000 a year. I can put down a $30,000 deposit if required. Thanks, Margaret
Money Smart Family Answer
Margaret, we aren’t qualified as investment advisors, so please check with others who are more qualified in the area of investments and taxes in your area.
Buying an investment property is a risky thing, especially if you aren’t well versed in managing, maintaining, or renting an investment property. We have several friends who were in excellent financial shape with lots of savings and retirement investments who decided to purchase rental properties.
Property values dropped and costs for maintenance went up. They’re struggling to maintain their properties and their current lifestyles.
Is Your Rental Property Worth The Risk?
You’re talking about putting less than 10% down on a $340,000 investment property. That’s a very risky proposition. Could you afford to fully pay a monthly mortgage of $310,000 along with your other monthly expenses if the property remained vacant for several months?
If you have $30,000 to invest – buy something outright or invest it in something that you thoroughly understand and can maintain or resell.
Asking Friends & Qualified Advisors for Help
Have you asked any of your money savvy friends what they think? We’re not talking about anyone who stands to make money off your investments, like a realtor or property manager.
Don’t get us wrong. You’ve done a great job saving money and are to be commended for having $30,000 saved. Just take your time, do your research, and avoid debt with a passion.