How to invest in property without affecting your lifestyle

By : Nick Marr

Investing in a property for a long term financial security doesn’t have to rob you of the daily pleasures of life. And it’s as simple as we say it is!

We all want to own a piece of land that turns out to be a great investment to stabilise and secure our future with. While this is a promising investment opportunity for first time buyers, it may negatively affect our subjective well-being.

Investing in flipping houses in Australia or a condo complex in porto vita may mean that you have to limit your casual joys like weekly dinners, gym memberships and trips abroad.

It’s 2020, and the good news is that we have ways for you to invest in property without compromising your lifestyle. In fact, to everyone’s surprise, we also have ways to invest in property even when we are out of cash.

1.   Go for a property priced within your quota

It’s not a wise choice to spend off from loan sharks, family members or credit cards. This refers to living “within your means.” And there won’t be a more important opportunity like flipping houses in Australia where you need to pay attention to your financial quota.

You cash flow can take an uphill when you think from the safety of borrowed money that you believe can be returned later. This counteractive belief seldom backfires when you see the interest rates rising along with the money.

Knowing your means also saves you from spending a larger sum than you have to and losing your sleep over it.

2.   Say No to High Strata Levies

Body corporate fees or strata levies might be one of your hindrances in securing a good future. They are the biggest expenses when purchasing property as the more amenities are offered by a building, the higher its strata levels are going to be.

As compared to large extravagant apartments, the smaller units come in lower levies. For example, a typical two bedroom apartment in an older block will cost you around $659 on a quarterly basis in Lilyfield. On the contrary, an apartment of the same size in a 400-floor skyscraper will cost you around $1646 levies on a quarterly basis in Westmead.

Although most people might go for the bigger levie figure for added amenities like a pool, spa, gym and a tennis court but they are also possible money pits that could drag you down with a high strata bill.

3.   Bargain for a minimal interest rate

An interest rate is not only a realistic concern but it’s also an opportunity to pitch in with negotiations to save on a lot of bucks. With APRA restrictions wounding back, banks will have more capacity to lend an investment loan which makes it a high time to shop right away!

You may also add non-bank lenders. In case the rates don’t match up, you might need refinancing.

Even still, it is still a good idea to hassle your broker to hustle and ensure that you’re being offered the best rate available.

4.   Make Use of an Offset Account

In an offset account, you can keep all your monthly income that offsets your increment property loan. This will decrease the payable interest rate for the time your money stays in the account.

To avoid repaying tax deductible debt, you can keep your surplus cash in the offset account. This will help you save by paying the bank interest only.

So in case you feel like buying a new car or flying to a vacation destination, you can continue to claim the interest on your loan as tax deduction without having the fear of playing with your tax deductible loan.

5.   Invest in a Landlord’s Insurance

Flipping houses in Australia can be hard to tackle. Once you’re done with the challenge of renovation and want to look for tenants, it is better to opt for a Landlord’s insurance.

As you might not know the tenants you’re dealing with, hence, your property can be damaged or some of them may leave without paying the monthly rent.

The cost of land insurance can be deducted as tax but it’s not wise to rush towards large insurance companies too. Just make sure you are being offered a good deal which is – the insurance policy covers you for all possible eventualities that you would need. A company that is ready to drop their premium in light of your willingness to put forward in excess is a good choice to make too.