Purchasing a rental property is one of the ways for Australians to consolidate their savings into a single high-value asset with the ability to generate a consistent return. However, the decision to buy an investment property  isn’t one that should be taken lightly, with the commitment requiring discipline and a thorough understanding of how the process works.
So, how can Aussies decide whether or not they’re ready for a rental property? There’s no one-size-fits-all approach, but if you meet the following three criteria, you may be in a strong position to make the investment.
You have cash or equity.
There’s no point considering an investment in property if you don’t have the finances to support the purchase. While for some buyers this may mean utilising their savings to pay a deposit, there are other options available if you already own most or all of your personal home outright. The amount of your home that you own, is known as ‘equity’ and it can be put towards a deposit on an investment property. For example, if your home is worth $500,000 and you still have $200,000 to pay off, your equity is $300,000.
Alternatively, if you do have savings to spare, and have been planning to buy an investment property with that nest egg, you’re in a similarly strong position. Regardless of whether you plan on using cash or equity it’s vital to find an investment property loan that offers competitive interest rates  in order to pay off the mortgage as soon as possible.
You’re looking for a property.
Once you’ve worked out whether or not you can afford a property, the second question you should ask yourself is whether or not you’re really looking for that type investment. If you already have high-performing savings accounts, or plan on putting your money to use in other ways (such as starting your own business), it may be better to hold off until you’re ready for a rental property.
This is because any form of property investment comes with a serious level of commitment and will typically involve years of repayments. If you’re at all unsure of whether or not you’ll be in a position to meet these repayments, it’s a good idea to wait until you’re confident in your financial stability.
You should also consider why an investment property may be suitable for your specific situation. For example, in today’s market, many parents see purchasing property as not just beneficial to them, but an opportunity for their children as well.
You’re (close to) retiring.
Finally, one of the most common reasons that Australians decide to invest in property is that they’re coming to the end of their working lives. This is often a challenging transition, and if you’re not prepared with a plan to maintain an appropriate level of income, it can be an incredibly stressful time. The clear benefit of property for retirees is that the investment produces a stable income per month, which assists for a comfortable retirement.
Of course, it’s important to get started ahead of time, to ensure a smooth transition when you do retire. Accordingly, if you plan on stopping work sometime within the next five to ten years, it’s well worth thinking about the benefits of a rental property.
If you meet all of the criteria that we’ve explored in this article, you’ll still need to secure an investment property loan that suits your needs. That’s where Beyond Bank can help. Get in touch  with our team to find out more.