Editor's Note :: March 2010
If you're about to approach your lender or mortgage broker for a loan to purchase an investment property, be warned - it's tough out there.
Gone are the days of readily available finance and 100 per cent or more loans.
The goal posts have moved.
In many cases lenders' loan-to-value ratio requirements have changed and debt serviceability limits have been tightened.
So what can investors who want to grow their property portfolios do to overcome these obstacles?
Many of you asked us to find out... so we did.
On page 26 you'll find a special report which explains why the finance tap has been turned down to a slow trickle for property developers and low-doc borrowers, and - more importantly - the strategies that will help you source the funding you require.
Also, on page 20 we look at 17 simple but effective techniques to help any investor break through the credit ceiling and obtain their next loan.
A hangover from the global financial crisis, the tougher lending climate has prompted many of you to reassess your approach to investing. Instead of concentrating on long-term capital growth from negatively geared investments, we're hearing of more readers turning to positive cash flow property. That is, high-yielding property that typically has slower capital growth but offers a rental return that exceeds holding costs, effectively giving you an extra source of income.
Sounds good, doesn't it? And it certainly has its place in a balanced portfolio.
Plus, if you have a higher rental income you improve your ability to service debt, which in turn strengthens your case when you go to the bank with cap in hand. It's a win-win.
In recent years, when interest rates were rising alongside property prices, positive cash flow properties were difficult to find. Today, with interest rates relatively low, more opportunities are emerging for properties that pay for themselves, or are experiencing rent growth at a rate that will ultimately turn them into positive cash flow assets.
In our exclusive cover story 'Fast Growth 50', we unearth the 50 fastest rental growth suburbs of Australia.
This extensive report begins on page 30 and is a good starting point in your quest for fast-improving rental returns.
Eynas Brodie
Editor
This month's lucky prize winner
Congratulations to Ann McRae of North Fremantle, Western Australia, whose name was drawn randomly from January's reader survey entries. You've won $1000 in cash. This month API is offering readers yet another chance to win $1000. For more details, turn to page 7. Good luck!
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