How Smart Asset Selection Will Solve Your Finance Dilemma
Even with current interest rates at a record low, tightened lending regulations in Australia, has really put the investment handbrake on for many investors. After speaking with hundreds of investors, here at Ripehouse, the greatest struggle for most in 2018 appears to be accessing finance to make that next purchase. So in this current financial climate, when it feels like the dreaded bank manager is holding all the cards and you are spinning your wheels on your wealth building journey, don’t let frustration take hold - there is a way around this dilemma.
In discussions with lenders, other property professionals and DIY investors, more than ever before, lenders are looking at your selected asset when determining whether or not to give the green light on your loan. Below are three factors to consider when selecting your next property, which will greatly increase your chances of loan approval.
1.The property needs to be high yielding
A property which is high yielding (we look at 5.5% or above), will be seen favourably by a lender. If your chosen asset provides a steady cashflow, lenders will take this into account when accessing your capacity to service a principal and interest loan.
2. The property needs to be located in a high growth “Lender Approved” location
We’re all familiar with the idea that location is everything when it comes to property investment. This is certainly also the case from a lender’s perspective. When a lender is evaluating your application and deciding whether or not to grant approval, they are weighing up their own risk. Purchases in and around our nation's capitals and key satellites are favoured in this process.
Bank managers are also getting smarter. They are looking at research and basing their location preferences on growth signals and economic factors.
Recently our investors have been given the green light on properties located within growth areas, approved by Ripehouse Research, in the greater Newcastle area, Adelaide, Tasmania and now WA is beginning to emerge.
3. The Property needs to be at a lower purchase price
Based on Ripehouse investor feedback, most approvals granted in the first part of 2018 were for properties under the $420k mark.
In addition, we are also seeing a bias towards approvals for properties 15 years old or less. This may, however, have more to do with the types of properties that are selling or turning over in these high growth areas.
How to find high growth, high yield properties
So how can you find high growth, high yield properties? Head over to Ripehouse.com.au and take us up on a limited time, no obligation, free trial. You can use the analysis tools to locate these high growth areas and find the exact streets and properties that are favoured by lenders, increasing your chances of gaining finance.