Sometimes the answer to a complex problem is simpler than you think. If you have been wondering how to increase the profit on your Adelaide rental investment property, it could be the right time to start thinking about refinancing. There are several reasons to consider refinancing, but here are the top few.
If you've had an investment property for a while now, chances are interest rates are lower than when you first took out a mortgage and received the keys to your rental. Now could be an excellent time to lock in a fixed interest rate and save yourself a lot of money over the life of your loan. Of course a lower finance cost means more of a profit on your rental income.
Improve the property
You could consider refinancing in order to free up some cash to complete renovations to your rental stock. Significant improvements could net you a worthwhile increase in rent. Things like deck extensions or adding a room could make a property much more liveable, and therefore rentable.
If it's been a while. updating the kitchen and bathroom may be a necessary move.
Borrow against it
Refinancing to free up cash to pay the deposit on another property is another reason many investors consult their mortgage adviser. Another process known as debt recycling involves leveraging off the equity of current assets, such as an investment or your personal property. Using the equity in one asset to fund the purchase of another can see you exponentially increase your portfolio over a number of years.
This is a wise move if you'd like to retire off of your investment income in the future, without selling too many assets to free up equity.
Rental investment properties are becoming an increasingly important factor for Adelaide investors seeking serious returns. Adelaide properties received the highest capital growth in the country last month according to RP Data, making it a no-brainer for future property moguls.
The suburb of Norwood was ranked by realestate.com.au as one of the most sought after locations in the country earlier this month, so this may be one of the investment hot spots to watch out for.