As a FIFO Fixed Plant Operator, you're in a unique position to build substantial wealth through property investment. Your solid income and work schedule can work in your favour when it comes to acquiring multiple investment properties and creating a robust investment property portfolio.
Understanding Investment Loan Options
When buying an investment property, you'll need to access Investment Loan options from banks and lenders across Australia. Unlike owner-occupier loans, investment property loans typically come with:
• Higher interest rates (usually 0.10% to 0.50% above owner-occupier rates)
• Different loan to value ratio (LVR) requirements
• Stricter application processes
• Varying loan amount limits based on your borrowing capacity
Most lenders offer both variable interest rate and fixed interest rate options for investment loans. Variable rates can fluctuate with market conditions, while fixed rates provide certainty for a set period, making calculating investment loan repayments more predictable.
Property Types Worth Considering
When you invest in real estate, choosing the right property type affects your rental yield and capital growth potential:
• Apartments: Often provide higher rental yields but may have lower capital growth
• Town houses: Balance between yield and growth potential
• Stand alone dwellings: Typically offer stronger capital growth in established areas
Research property markets thoroughly, focusing on areas with strong rental demand and growth prospects. Consider factors like proximity to employment hubs, transport links, and future development plans.
Managing Loan to Value Ratios
Your LVR determines how much you can borrow and whether you'll need lenders mortgage insurance (LMI). Most lenders allow up to 80% LVR for investment properties without LMI, though some specialist lenders may go higher.
For your first investment property, aim for a lower LVR if possible. This reduces your loan amount and positions you for acquiring additional properties later. As your investment property portfolio grows, maintaining adequate equity across properties becomes crucial.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
The Investment Loan Application Process
Applying for an investment loan requires comprehensive documentation:
- Income verification: FIFO workers need to provide detailed employment contracts and bank statements
- Property research: Rental appraisals and property valuations
- Financial position: Asset and liability statements
- Investment strategy: Clear explanation of your property investment strategy
Many lenders now offer a streamlined application process for subsequent investment loan applications once you've established a relationship and proven track record.
Understanding Investment Loan Features
Modern investment property loans come with various features:
• Interest-only payment options to maximise cash flow
• Offset accounts to reduce interest payments
• Redraw facilities for accessing equity
• Interest rate discounts for larger loan amounts or multiple properties
These property investment loan features can significantly impact your overall returns and cash flow management across multiple properties.
Tax Considerations and Negative Gearing
Buying a rental property often results in negative gearing, where your rental income is less than your expenses (including loan repayments, rates, insurance, and maintenance). This creates tax deductions that can reduce your overall tax burden.
However, don't buy investment properties solely for negative gearing benefits. Focus on properties with strong fundamentals that will deliver capital growth over time.
Additional Costs to Consider
Beyond the purchase price and Investment Loan Interest Rate, factor in:
• Stamp duty (varies by state and property value)
• Legal and conveyancing costs
• Building and pest inspections
• Ongoing property management fees
• Insurance and council rates
• Maintenance and repairs
These costs affect your rental yield calculations and overall investment returns.
Building Your Portfolio Strategy
Successful property investors typically:
• Start with one well-researched property
• Build equity before acquiring the next property
• Diversify across different property types and locations
• Regularly review and refinance to access better rates
• Monitor property market conditions and adjust strategies accordingly
Your FIFO income provides excellent borrowing capacity, but ensure you can service multiple loans even during off-roster periods.
Building wealth through property investment requires patience and strategic thinking. With proper planning and the right investment loan options, FIFO Fixed Plant Operators can create substantial long-term wealth through property investment.
Call one of our team or book an appointment at a time that works for you to discuss how we can help structure your investment property financing strategy.
