How to set up an equity loan for your investment property
15 Jan 20
Growing a property portfolio to fund your lifestyle goals (and give your parents bragging rights...) requires regular review of your financial position and investment artillery.
Find out what to look for and how to arrange a property valuation to help you set up your equity loan.
On the go? Here’s 30 seconds of take outs:
- Reviewing your loans, property portfolio and cash flow position can help you maximise your investment potential.
- Stay on top of the property market and rental market by reviewing property reports and asking your property manager for insights.
- Get help with valuations, setting up your equity loan and more with Capital Properties Pinnacle Support Program.
Keep reading >>
Review your investment property
It’s always a best practice to review your loans and your property portfolio on a regular basis.
With good planning and expert advice, property investing can (mostly) be a set-and-forget strategy which is awesome for the Defence Force Property investor.
But property markets and economic conditions shift. And you need to be ready to shift too.
To maximise the return on your switched-on investment strategy, it’s essential to regularly review:
- your cash flow position
- the property market – including state and local property market statistics
- the rental market
- secure credit at the top of the market
- taxation changes and benefits
- loans and interest rates
Because investing to the next level requires full awareness of both the market and your financial situation.
Track the Australian property markets and local markets
You’ll need to get actively involved in the state of the market and review indicators on a regular basis. I recommend reviewing the market and rental returns every six to twelve months.
To do this your first point of call is to make sure you build a great relationship with your property manager. They are your eyes and ears on the ground. Ask them how the rental market is going at the moment and what they’re seeing.
Secure credit at the top of the market
A question I’m asked regularly is whether to sell when the property market is at ’12 o’clock’, at a property cycle peak.
I say, “why sell?” When you sell an asset the opportunity to receive future growth is done, you’ve realised the full possible returns of the investment property at that point. Are you ready for this to be the full potential of your investment?
On the other hand, if it’s part of your overall strategy to sell at the property cycle peak, and it’s something you’ve been planning, then I say “why not?”
Monitor and claim all tax benefits
Remember, any opportunity to reduce your tax means cash back in your pocket.
Best next steps to set up your equity loan
Verify your investment property value.
There are some great free tools out there which can give you a great idea on the value of your property, including:
- www.realestate.com.au > You can create a profile and when you load your property addresses in it can give you an estimate.
- www.capitalproperties.com.au > Request a free RPdata desktop valuation. At Capital Properties we have an RP data subscription to help our clients get a good understanding of where the properties you own are at!
- www.anz.com.au > ANZ provide really good property reports created by the Australian Property Monitors.
Or ask your investor friendly mortgage broker. They will be able to run free desktop, kerbside and full valuations.
Types of valuations
Desktop valuation: automated valuation done typically with property data, recent comparable sales. Desktop valuations can be done quickly, and some lenders can use them for a refinance. Best of all you don’t need to displace the tenant as the valuer won’t need to physically visit the property.
Kerbside valuation: the valuer conducts a drive by inspection the property. As a general rule of thumb, when the property and estimated value are roughly the median value dollar for dollar to the suburb, and the property is not in lenders mortgage insurance, a kerbside valuation may be used to confirm the property value.
Full valuation: a detailed report giving the value for a property on a specific day valid for 3 months by a qualified valuer. A valuer needs to have a formal training in the form of a university qualification and by the nature of the valuation being for the bank – a security valuation for finance they tend to be quite conservative. The full valuation report is quite a detailed report. The first page covers the property details as well as the risk ratings as you move through the report, you’ll see the market value for the proposed property, descriptions for the land and the main build, and sales evidence and additional comments with photos.
Do you need some help with this? Does property investing feel too hard to start by yourself? Get some experts around you to help you on your way with Capital Properties Pinnacle Support Program.