Easy steps to build your property investment portfolio
“A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope
1. IMPROVE YOUR CREDIT SCORE
When using Other People’s Money (OPM), you need a good credit record. Although it is noble to have no personal debt, it is a disadvantage when you want to use the bank’s money to build your property portfolio as you need credit to get credit. Start with a very small credit card, overdraft, and a clothing account or two. Remember to check your credit score annually. The better your score, the better the financing you’ll get.
2. USE A BOND ORIGINATOR
Banks compensate bond originators, so it won’t cost you anything for them to apply at all the banks for financing and assist with the negotiation of your term and interest rate. Don’t be afraid to negotiate and send the proposal back if you are unhappy with it. We often get better interest rates and terms simply by asking!
3. APPLY FOR 100% FINANCING
Even if I have a deposit, I prefer to apply for 100% financing. You can rather park your deposit or available funds in the access bond afterwards. Get a refresher on how to use your access bond to its fullest on one our previous articles: Start Using Your Access Bond Today.
4. APPLY FOR THE LONGEST BOND POSSIBLE
This is an investment property. Your tenant is paying your interest, so why pay your bond off faster and use your own money when you can rather improve cash flow and use as little of your own money as possible? You can find out more about this on one of our previous articles: The Only Time 30 Is Better Than 20.
5. APPLY AT MULTIPLE INSTITUTIONS
I often get better deals from banks other than my own. Remember, each bank’s strategy and risk appetite are different at different times.
Now that you’ve got these 5 easy strategies in your property investment arsenal, all that is left is to go forth and prosper!