June 13, 2019

An investment property, according to Investopedia, is any real estate property bought for the purpose of getting a return on investment (ROI) by selling the property or renting it out. People often purchase investment properties to earn more income or reduce their property tax. If you took an investment loan to buy an investment property in Thailand, the accompanying interest will usually be tax-deductible. You can pay a cheaper tax or make a tax claim.

Investment Loans

Investment property offers a number of benefits to both first-time home buyers and experienced property owners. Instead of a regular home loan, first-time home buyers are encouraged to opt for an investment loan. Aside from being more convenient, investment loans have a higher borrowing power that ordinary mortgage.

From a lender’s point of view, however, investment loans have a higher risk than mortgage loans. Banks will sometimes find it hard to sell your investment property because of tenants refusing to evacuate the property. To avoid payment delays, banks impose strict loan policies while lenders only accommodate loans with a low loan-to-value ratio (LVR). In rare instances, you may come across lenders offering 95 per cent LVR.

Why Purchase an Investment Property?

In a stable property market setting, an investment property can give you a fixed return on investment.

In the case of rental homes, you can generate regular income through regular rental payment from your tenants. If your rental income exceeds your mortgage repayment, you do not have to worry about extra funds. You can also use your surplus funds to maintain your property instead.

Should your investment property sit in an accessible location, its value will increase and you earn more profit from it.

An investment property allows you to use the existing equity of your property to buy more investment properties or secure another loan.

What are the Cons of Purchasing an Investment Property?