Buying property is one of the best and most secure ways to insure your wealth now and into the future. It’s a simple way to enjoy a passive income or set yourself up for retirement. Property investment can seem like a daunting task when first embarking on the journey. But we’re put together a few tips to help simplify the process for you before jumping in.
Where to start when buying an investment property?
Before you even start researching properties, it’s important to set out what your goal is for property investment. Are you wanting to hold for a short period and resell, do you want to renovate and flip or do you just want a passive income from tenants? There are different strategies and ways to invest for your individual property investment goals. Talking to a skilled and knowledgeable real estate agent will help you determine what types of properties you should be looking at to meet your goals.Appraisal Request
How to choose an investment property?
Research, research, research. It’s not always enjoyable, but the key to any good investment is learning as much as you can. Get to know the areas you’re thinking about purchasing in. Are they growing regions? Is it best to purchase a house or a unit? What kind of people live in the area? Which amenities are nearby? What’s in your price range? Make sure these answers align with your investment goal.
It’s a good idea to have a chat to a local real estate agent when you’re researching your investment property. They can offer unique insight into what the area can offer and the region’s potential for growth. It also presents the opportunity to take advantage of ‘off-market’ properties, where you can snap up a great investment before it goes to market.
How to manage an investment property?
How to successfully manage an investment property is just as important as selecting one. It’s a careful balance of maintaining the profitability while retaining a desirable product for tenants and future purchasers.
While managing the property yourself as a private landlord is a great way to keep costs low, it also requires an extensive understanding of legislation surrounding tenancies, bonds as well as managing any ongoing repairs. Choosing an effective property management team will simplify the process and take the stress off you. Don’t forget – property management fees are tax deductible!
It’s important to screen any potential property managers before entrusting your investment to them. Make sure you understand how the process works, what is required from you and what is required from your property manager. Have a solid knowledge of the tenant selection process, the repairs process, and how often you’ll be in contact with each other. Having an experienced and trustworthy property manager that you can rely on to maintain your investment will make a world of difference in the long run.
Inspection day tips and last minute touches
People often use fresh flowers, brewed coffee and baked bread to generate interest and emotion in prospective buyers. Be sure to utilise these tools if you feel that adding such finishing touches will add value at your open inspection.
Arrange for pets such as cats and dogs to be off-site on inspection days. Potential buyers could be allergic or more often frightened of the family pet lazing in the back yard.
Last minute tasks like storing toys, tidying bedrooms, clearing dishes and removing washing from the clothesline creates space and the sense of cleanliness.
Your PRD agent will arrive before the inspection to collect keys and have a final once-over of your property before showing buyers through. It’s best for you to leave during inspection time — buyers might be put off knowing the owner is nearby. Take the time to go for a walk or enjoy a coffee in celebration of your hard work.
When you return, your PRD agent will provide an overview of how many groups attended your inspection, and which parties expressed a keen interest in your property. The negotiation process will begin when interested parties make an offer, and all your efforts in preparing your property for sale will come to fruition.
Negotiating and accepting an offer
Your PRD agent will facilitate all aspects of the negotiation process. They will present all offers in writing, leaving you with the option to accept, or provide a counter offer. If the buyer does not accept your counter offer, they have the right to withdraw their original offer. When deciding on an offer, you should also consider settlement date, suitability of deposit and whether terms/finance are arranged. Your PRD agent will be able to provide advice on such considerations.
- Private Treaty
Once you have reached an agreed selling price with the buyer, you need to sign the contract. The buyer pays a deposit, usually 10%, with the balance paid on settlement date.
With auctions, there is no cooling off period. The deposit is paid and contract signed on the fall on the hammer. After, the contract is unconditional, it is a legally binding contract and the process of transfer can begin. A solicitor or conveyancer will usually handle the transfer with stamp duty (if applicable) being paid by the buyer.
- Settlement Day
On settlement day, the keys are handed over to the buyer and the property becomes their responsibility, thus it is important to note that until settlement day, you are responsible for insurance etc.
(The legal process varies in each State, so consult with your solicitor and PRD agent).