Wooloowin's rental demand makes it a popular investment suburb. Here's how loan structure affects the numbers for investors.
Wooloowin has become a steady performer for investors, largely on the back of its train station, proximity to the CBD and a rental market that holds up well through the year. Most of the enquiries I get for the suburb are investment purchases rather than owner-occupier, and the loan structure question matters more here than the interest rate does.
The two things that most affect the actual return on a Wooloowin investment property are how the loan is structured and how the ownership is set up. An interest-only structure preserves cash flow in the early years but affects long-term equity growth differently to principal and interest. Ownership structure, whether that's individual, joint, trust or via an SMSF, changes both the tax outcome and the borrowing capacity available for the next purchase.
For investors looking at Wooloowin specifically, worth working through before you buy:
- Whether interest-only or principal and interest suits your broader portfolio strategy, not just this one purchase
- How the purchase affects your serviceability for a future property, if building a portfolio is the plan
- Whether the ownership structure you're using now is still the right one, particularly if your circumstances have changed since your last purchase
I work with a number of clients building property portfolios through the inner-north corridor, and Wooloowin comes up often. Getting the structure right on this purchase, rather than just the rate, is usually what protects the next one.
