Choosing the Right Investment Property for Your Landscaping Business
As a landscaper, you understand the value of a solid foundation and how to transform a property into something special. When it comes to buying an investment property, you'll want to apply that same attention to detail. Selecting the right property for your investment portfolio can set you up for financial freedom and help you build wealth through passive income.
Let's look at what you need to consider when selecting an investment property that aligns with your property investment strategy.
Understanding Your Investment Loan Options
Before you start inspecting properties, you need to know your borrowing capacity. This means understanding what investment loan amount you qualify for and what investment loan products are available to you.
Working with a mortgage broker who understands the trades industry can help you access investment loan options from banks and lenders across Australia. They'll help you compare:
- Variable rate investment loans offering flexibility
- Fixed rate options for predictable repayments
- Interest only investment loans to maximise cash flow
- Principal and interest loans for long-term equity growth
Your investor deposit will typically need to be larger than a standard home loan, with most lenders requiring 10-20% depending on your circumstances. The loan to value ratio (LVR) affects whether you'll need to pay Lenders Mortgage Insurance (LMI), which protects the lender if you borrow more than 80% of the property value.
Location Matters More Than You Think
Just like choosing the right soil for a garden, location is everything in property investment. You want areas with strong rental demand and potential for portfolio growth.
Consider these factors:
- Proximity to transport, schools, and shopping centres
- Employment opportunities in the area
- Population growth trends
- Infrastructure developments planned for the region
- Vacancy rate in the suburb (lower is better for consistent rental income)
As a landscaper, you might spot opportunities others miss. A property with poor curb appeal or an overgrown yard could be purchased at a lower price, giving you the chance to use your skills to add value.
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Tradie Home Loans today.
Understanding Property Types and Investment Returns
Different property types suit different investment strategies. Your choice will affect your rental income, maintenance costs, and potential for capital growth.
Houses typically attract families looking for longer-term rentals, which means more stable rental income. However, you'll be responsible for all maintenance and repairs.
Units and Apartments often have lower purchase prices and body corporate fees cover some maintenance, but these fees reduce your overall returns. Check the body corporate rules and financial health before committing.
Townhouses offer a middle ground between houses and units, often appealing to small families and professionals.
Running the Numbers: Can You Afford It?
Calculating investment loan repayments is crucial before making your purchase. You need to factor in:
- Your loan amount and investment loan interest rate
- Whether you choose variable interest rate or fixed interest rate options
- Ongoing costs like council rates, water rates, and insurance
- Property management fees (typically 6-8% of rental income)
- Maintenance and repairs
- Stamp duty at purchase
- Body corporate fees (if applicable)
Many investors use negative gearing benefits to reduce their tax burden. This strategy means your property expenses exceed your rental income, creating a tax deduction. However, you need sufficient income from your landscaping business to cover the shortfall each week.
Alternatively, positive gearing means your need rental income exceeds your expenses, providing immediate cash flow. This approach might suit you better if you're building your business and want additional passive income.
Maximising Tax Benefits
One of the key investment loan benefits is the tax advantages available to property investors. Understanding claimable expenses helps you maximise tax deductions:
- Investment property rates and interest rate charges
- Property management fees
- Maintenance and repairs
- Building depreciation
- Insurances
- Advertising for tenants
Interest only loans are popular with investors because they maximise tax deductions while keeping repayments lower during the initial years.
Using Equity to Grow Your Portfolio
As you build equity in your first investment property, you can leverage equity to fund additional purchases. This equity release strategy accelerates portfolio growth without requiring you to save another full deposit.
This is how many successful property investors build wealth over time - using one property to fund the next, creating multiple streams of passive income.
Interest Rate Considerations
Investor interest rates are typically 0.3-0.5% higher than owner-occupier rates, but you can often negotiate interest rate discounts based on your loan amount and financial position.
Choosing between variable and fixed options depends on your risk tolerance:
- Variable rates offer flexibility and potential rate discount opportunities
- Fixed rates provide certainty for budgeting
- Split loans give you both options
If you already have an investment property, an investment loan refinance could secure you a better interest rate and improved investment loan features.
Getting Your Investment Loan Application Ready
Your investment loan application will require more documentation than a standard home loan. As a landscaper, especially if you're self-employed, you'll need to provide:
- Tax returns (typically two years)
- Financial statements
- BAS statements
- Bank statements
- Rental appraisal for the property
A broker experienced with tradies can help ensure your application highlights your stable income and strong financial position.
Your Property Investment Finance Partner
Selecting the right investment property requires research, planning, and the right investment property finance structure. Whether you're buying your first investment property or expanding your property portfolio, having a knowledgeable broker on your side makes the process smoother.
At Tradie Home Loans, we understand the unique financial situations of landscapers. We can help you compare investment property rates, understand different property investor loan features, and structure your property investment loan to suit your goals.
Call one of our team or book an appointment at a time that works for you. Let's discuss your property investment strategy and find the right investment loan options to help you build wealth through property.
