Investing in property is the classic kiwi way of building wealth, and for the most part it has worked and will continue to do so.
Whether you’re just starting out, in growth mode, or happy with what you’ve got it’s important you know how the banks work. At the end of the day, they’re the ones that will ultimately fund that growth! Here’s a couple of simple tips to ensure you keep control in your hands.
Know what you’ve got
You should know your portfolio inside out or at least be able to access the information easily. If you don’t already have a way to track this then you should and it should be kept up to date. Whether this is a simple spreadsheet (like this one) or something more clever like KITT, it doesn’t really matter. What matters if you know what you’ve got and you know which strings you can pull if you need to. Ultimately it shows the bank you know what you’re doing and it puts you in control of you in control of your next move.
You should know at a minimum the following:
Loan amounts at each bank
LVR – good to understand access to equity if needed
Loan start dates and remaining terms
Interest only start dates and when that rolls over
Structure it right
Getting the right structure for your portfolio is vital to your investment strategy. It doesn’t matter if you’re only looking for a couple of properties, or building an empire, you need to get this right.
Split banking is a great way to spread risk. In a changing world, it gives you the benefit of accessing different bank policies which can be a big benefit if your looking to buy or sell. It’s not always the right structure though. Having all your lending with one bank can give you great leverage if you’re talking to the right people.
The structure of your portfolio isn’t a one size fits all approach so get advice.
The reality is that pretty much anything you do with a bank now requires an application and therefore a test of your serviceability. Having the right information and the right structure give you more control of that outcome.