When you buy several properties, you’ve started to build a real estate portfolio. This is a great way to hedge against inflation and interest rate increases. If you find that interest rates are lower than your current rate, refinancing becomes a viable option.
Additionally, owning several properties puts you in different categories for taxes, future financing, and risk.
The way you intend to use your real estate portfolio dictates your tax liability. If any of the properties are negatively geared, they can help offset profits from the others. Then, when you sell, it’s a good idea to consult with a tax professional who can offer additional guidance.
As soon as the value of your properties is greater than the outstanding mortgage amount due, you’ve started to build equity. Equity is a great tool to leverage against future property purchases. On paper, it puts you in a position of financial strength.
At the same time, if you own a series of multi-unit properties, lenders take a look at the vacancy rates. These rates determine your income. The higher the vacancy rates, the more risk the property poses. Lenders simply want to be sure that all repayments will be made as outlined in the loan’s terms.
When your portfolio reaches a significant size, it’s time to start considering filing for a business entity to protect your assets and the properties. You may also incur some tax advantages by incorporating.
Buy Several Properties Conclusion
Those who already own or intend to buy several properties and need financing guidance are welcome to contact our Mortgage House lending specialists. We can take a look at your current rates and determine if any can be improved. Home loan interest rates for investment properties fluctuate. We can find the best ones for you.
