With a looming housing price crash in Australia, many investors are wondering whether their duplex development will lose its value. So will it? Read on to find your answer.
A worry for any investor with a duplex development in Australia right now is the looming housing price crash. In particular, investors worry if it’ll make the value of their duplex development go down.
So will it be able to depreciate the value of their investment? Well, the answer to this question is a yes and a no. With the housing price crash, the better prepared you are the higher your chances of not being affected. If you are not prepared, it will easily make your duplex development lose its value. This’ll ultimately impact negatively profits you stood to realize from your investment.
To help you better protect your duplex development, we’ll share with you steps you should take when dealing with a real estate crash. But first, we’ll be looking at the negative impact of housing price crash to not only your duplex development but also the economy as a whole.
Negative Impact of Housing Price Cash To Your Duplex Development
To understand why and how a housing price crash can make your duplex development loose its value, you’ll need to know its impact on the economy.
Whenever there is a housing price crash, there is always a negative wealth effect on households. Additionally, it usually ends up greatly affecting the economic growth of a state or a country. With a looming housing price crash in Australia, expect demand for duplex developments to reduce. Why? Well, many Australian households will have low spending power and confidence. Furthermore, they’ll be more eager to use a high percentage of their income to pay off mortgages they already have. With low demand for duplex developments, expect to have a low (if any) return-on-investment (ROI). In other words, you can expect your duplex development to lose its value.
As an investor, you should worry about being trapped with negative equity due to the housing price crash. In case you are wondering, this a situation where your duplex development is worthless compared to the mortgage you ought to pay. In most cases, this usually results in investors losing any opportunity for having equity withdrawal.
How Can I Protect My Duplex Development?
Protecting your duplex development from the looming housing price crash is very important. Unfortunately, not many know how to do so. Furthermore, the ones that do protect themselves don’t do it properly. To help you with this, below are a few tips to take to heart;
- Know Your Buying Power
- Avoid Zero Down Payment Financing Plans
- Get A Fixed Rate Mortgage
Know Your Buying Power
Knowing your buying power before investing in your duplex development can help protect you. To know your buying power, you need to first determine costs. For this, you’ll need to calculate your own budget. Once you’ve done this it’s time to settle on a duplex development of your choice. The problem with this is that many seek advice, opinion or assistance from mortgage lenders. Some rely on real estate agents to get this information.
So why is this a problem? Well, this usually results in investors making a financial commitment to development they can’t afford. That said, it is advised to believe in yourself and make a budget for your duplex development that works for you. When drafting your budget, remember to include house maintenance costs.
Avoid Zero Down Payment Financing Plans
When thinking of investing in duplex development, do keep in mind that there are different types of financing plans. One such plan is zero down payment financing plans. A big reason why many investors choose to settle with this type of plan is incentives. Using this financing plan for your duplex development, allows you to get a loan with no financial investment. With such an arrangement, your lender is essentially the property owner. Yes, this also goes if you’ve started paying out in instalments. Now the worst part, in the event of a real estate market crash like the looming price crash, they are likely to take it from you. To recover their funds, they’ll likely sell your duplex development leaving you homeless.
What’s an ideal option? Well, go a finance plan that has a 10% or 20% down-payment rate. This way you’ll be able to be in control of your investment.
Get A Fixed Rate Mortgage
Mortgages are an investor’s best friend. They make it possible for investors to invest in new duplex developments. The best part is that with a mortgage you don’t have to pay it at once. When settling on a mortgage, do keep in mind that there do come in two types. These are adjustable rate and fixed rate mortgage.
An adjustable mortgage rate is one where a loan’s interest rate can increase or decrease. This market plays a big role in the increase or decrease in rate when with an adjustable mortgage rate. If rates rise and you have this mortgage you’ll end up paying more money for your duplex development. Fixed mortgage rate, on the other hand, is one where interest rates are fixed. Regardless of what happens in the market, you will not be charged extra. In addition to not having to pay more, it allows investors to pay low instalments. This way, you’ll protect yourself from the real estate market crash.
For added information on all things, duplex development does get in touch with Duplex Invest. You can as well contact Duplex Invest for help on how to manoeuvre the looming price crash. Dial 1800 600 098 to contact a member of their representative team.