How to Own the Best Investment Property in Australia

Mar 1 2015 / 10:06 pm Was written by Atwell & Co. No Comments Yet
How to Own the Best Investment Property in Australia

Purchasing a property in Australia can be a great step to securing your financial future and financial freedom for yourself and your family. You should bear in mind that an investment property should be about increasing your wealth thus ensuring your financial future. Now here are some tips that might help you own the best investment property in Australia.

  1. Look for multiple properties

Most new investors go out and look at two or maybe three properties in their local area, instantaneously purchase one and end up paying more. Look first at several investment properties in different areas for you to get a better grasp of the properties actual worth. You can also ensure that the property you are going to purchase is worth an investment. With the modern technology such as the internet, browsing through several properties is not difficult as it was in the past.

  1. Research the area

Just because you live in an area doesn’t mean you know what the property market is like nor how it is going to perform in the future. Research is so important to understand how the area performs both in rental returns and in capital growth. You could delve more into looking at data of the purchase price of previously sold properties in the area. Always remember the “3 rights” – choose a right property at the right area at the right price. This simply means a property that will possibly increase in value in the future or a solid investment that is going to deliver on your financial goals.

  1. Conveyancers versus Solicitors

A Conveyancer specializes in real property, most of them are self-employed or they run their own business, while a Solicitor can practice in many areas including conveyancing. The cost of services offered by a Conveyancer are generally ‘fixed fee’ and considered cheaper than that offered by a Solicitor. A Solicitor would suit best if a transaction is litigious or is beyond the scope of what is considered conveyancing work. You would consider using the services of a Conveyancer if the transaction is not complex or just legal work involved in a conveyancing transaction.

  1. Get a Building or Pest Inspection

Purchasing a home is a big investment, thus it is essential that you know exactly the condition of the property and facilities that you are buying. For you to make an informed decision of whether or not to proceed with the purchase, a pre-purchase building and pest inspection is advisable. Pest inspection will identify areas under timber pest attack and conditions conducive to timber pest attack. A building inspection can provide you reports and comments on structural damage, conditions conducive to structural damage, as well as any defects in the condition of secondary and finishing elements to the property. If you get these done, then you can be assured that the property is up to your standard and doesn’t have any major issues that’s going to cost you an arm and leg down the track.

  1. Don’t Get too Emotional

An emotional purchase is one of the scariest financial decisions that one can ever make. This might lead us to often make poor financial decisions. Even if you love the property at first glance, it would be best if you sleep over your decision. The property might seem perfect for you, but you need to consider its location or the property size if you intend to build structures such as a granny flat for additional income. Look at it as a financial deal, as if you’re buying stocks on the stock market. Try to take emotions out and assess it for what it is.

  1. Set your investment goals before you begin investing

A property is a long-term investment and you should not rely on property prices rising straight away. If ever you need money in the future, unlike shares or managed funds, you can’t just sell part of your investment property. Articulate what your goals are, structure your plans and set a deadline as to when you want to achieve these. Think…. if you want passive income then it’s not going to make a whole sense for you to go out and purchase a negatively geared property.

  1. Talk to the Neighbors

Find out as much about the area from the locals as you can. Go around, do some door knocking and talk to the neighbors and ask them about the street, about the neighborhood or if there’s anything that you need to know. You’ll be surprised that even by just chatting in a shop with the locals you’ll learn more about the property, area and the neighborhood.

  1. Don’t Pay in a Hurry

Do not pay in a hurry, slow down let’s put the brakes on in a bit. When we want to buy our first investment property, we want to purchase it as quickly as we can. But hold your horses, property markets are not going anywhere. There’s always going to be properties for sale and, there’s always going to be great investment deals. So don’t be in such a rush, if you do you’ll end up purchasing an investment property, that you pay too much, or purchasing a property in the wrong spot that will not deliver the financial returns that you want.

  1. Do the cash flow analysis

This is something that’s not easy to do and this is the reason why many first homebuyers or new property investors do not actually do – the cash flow analysis. You need to analyze all of the expenses of the property and all the income including vacancy rates. You need to assess whether this is a property you can afford and again whether it’s going to achieve your financial goals. Some of the obvious is your mortgage. But then you’ve got things like property manager cost, council rates, you’ve got maintenance on the property, you got improvements, insurance, there are so many different expenses that you need to pay for. That is why you need to understand exactly what they are and when they’re coming so you can prepare your finances. The last thing you want to purchase is a property that you thought is going to be positively cash flowed. Because you didn’t do the analysis properly, it will actually cost hundreds of dollars per week more than you can afford.

  1. Don’t Just Negotiate on Price

Almost everything in property investment is negotiable. There are some things by law that you can’t negotiate, but most people go and they negotiate in price instantaneously. They don’t consider negotiating the terms of the arrangement. What I meant is you can negotiate things like settlement dates, you can have early access to the property, or you can put down a small deposit. There’s a lot of bunch that you can do, that can actually make the deal more beneficial to you. It can help if you let the person selling the property feel like they got the price that they want. This can be difficult for the new investor to understand and do. There are ways wherein you can negotiate not on the price alone but with the terms as well. By so doing you can create a better deal for yourself.

So there you have it. These are the 10 tips in buying your first investment property. This is a long term investment, so if you need help on making these crucial decisions, find a good professional property manager and let them do their job.

 

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