As an investor I am well aware of the need to have the right loan structure and the importance of cash flow.
Obviously, rent plays a key part in this. From time to time, there can be a softening of the rental market. When this happens, the need for quality advice from Property professionals is paramount. Consulting with your property manager and finance broker is a good place to start.
As a finance broker, we can assist in a few areas. eg confirming loan structure and of course assessing one’s current interest rates.
On many occasions, getting a better interest rate on your investment loan can assist in reducing the blow of a rental reduction.
For example: a .25% reduction on a $350 000 loan will reduce the interest paid by $16 per week.
So, a $20 rent reduction won’t have as much impact on Cash flow.
I have heard of investors “hanging out” for the rent they want and allowing the property to sit vacant for an extended period instead of dropping the rent to meet the market. This can be a false economy as the rent not received out weighs the potential $20 a week reduction. It is better to meet the market, have the property tenanted in a quicker timeframe and if possible save money elsewhere. A good place to start saving money is with an annual loan review.
Managing you investment property successfully includes annual loan reviews.
If you would like a FREE review of your home and investment loans please call today.