Got an investment property in your sights? Before you pound the pavement, or consider signing anything, consider these handy tips from buyer’s agent, Josh Masters from Empire Property.
Tip # 1: Get confirmation of the strata fees.
When buying a unit or an apartment, it’s important to understand the property’s ongoing costs, including strata fees, property maintenance fees and whether there are any special levies planned or being paid.
Tip # 2: Request a price guide.
Ask for a ballpark figure from the real estate agent or vendor (if buying privately) but keep in mind that it’s common practice to under quote to the tune of about 10% of the purchase price. If the price guide is at the top of your budget, you may be wasting your time on a property you can’t afford.
Tip # 3: Ask for a rental estimate on the property.
Knowing the amount of income that the property could generate today and in the future will help you build a picture of how much you can expect to generate from the investment as well as your overall cashflow.
Tip # 4: Find out how many units there are in the building.
Smaller buildings can make for a more manageable investment, as there are fewer people to deal with when things need to get done. Their boutique feel also means they can be more attractive to tenants who are looking for a more intimate, homely place to live in.
Tip # 5: Confirm the property’s size.
Ultimately we all love space, so it’s no surprise that the larger the floor size, the more we’re usually willing to pay. Valuers also take a serious view on size, and often use size to calculate the value of a property – especially useful if you’re looking to refinance with your lender.
Tip #6: Check the security of the unit or apartment.
This is an important point when looking to attract the right kind of tenants, and it’s especially important if you’re looking to attract female tenants. While it can also be a point of convenience, features such as an internal laundry, security car space within the building or security intercom can make a big difference.
Tip # 7: Learn about the property’s tenancy history.
Is the unit or apartment tenanted, or being sold as a vacant property? If the property is already tenanted, find out what they are paying. Is there a rental contract in place? When does it expire? You could find that the tenants are pre-committed to paying a significantly low rent, which could affect your rental yield.
Tip: 8: Consult the experts to ensure the property is structurally sound.
Why waste your time tapping walls and checking the plumbing? Leave it to the experts!
Firstly, you will need to order a strata report. A strata report tells you about the building’s history, recent repairs, any disputes, and information about monies in the bank to cover repairs and maintenance and the likelihood of any special levies.
Secondly, order a building report. This will reveal property defects or problems, such as plumbing or cracking. If there are problems, you can use these to negotiate on price, as you may need to invest money on repairs. Further, you may need to bring in a specialist to assess the extent of the building’s issues.
Finally, an independent valuation will help clarify whether the asking price is the market price.
Tip # 9: Consider appointing a buyer’s agent to do the hard work for you.
Not everyone enjoys spending the weekend searching for property. Prefer the hands-off approach? Hiring a buyer’s agent will give you your weekends back. Generally, buyer’s agents charge around 2% of the property’s purchase price (similar to a selling agent). Some require a small financial commitment upfront.
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This article may not take into account changes to a client’s current circumstances in the future or the impact of specific future events. The article is not, nor can it be interpreted in any way as, a detailed financial plan tailored to the client’s individual requirements, but is of general application only with the result that information/assumptions in it may change pending completion of a detailed financial plan.
Reliance should not be placed by anyone on this article as the basis for making any financial, investment or other decision.
You should not make an investment decision based on this article. You must obtain professional advice on any investment decisions or outputs from this article to determine whether they are appropriate for your particular needs, investment objectives and financial situation.