Whether you are applying for property investment loans or you are just beginning to test the waters when it comes to investing in residential real estate, you're likely to come up against several terms that may be unfamiliar to you.
Here are some common terms you might come across – as well as some helpful tips to help you get started on the road to a successful investment.
Yearly rental income: The amount of money you earn from the tenants who pay rent to live in your property.
Median property price: This important figure is one to keep an eye on. It can fluctuate from week to week, and is also usually calculated monthly, quarterly and annually. It is a great benchmark to help you determine how your property is stacking up when you compare it with the purchase price of your home. Median is a form of averaging in which the very middle number of a set is used – in property, it is thought to give the most accurate indicator of market performance.
Gross rental yields: All investors want to know what kind of returns their property is achieving. First, calculate your yearly rental income, and then divide this figure by the purchase price of the home. The resulting number will be your gross rental yields.
Investment home loan: An investment home loan is a special type of mortgage designed specifically for people who are keen to invest in property. These differ from owner-occupier home loans in a number of ways – if you have any questions, make sure you do careful research and ask someone you trust about the process.
Plan a smart investment
Whether this is your first real estate investment or your 50th, it is important to go into the process with careful research and an open mind.
There are several things you want to bear in mind. For example, what type of tenants do you want to attract? Do you want to invest in a house or a unit?
Going into the process with a concrete plan can put you in a great position for long-term success.