For most of us buying a property is our single, biggest investment and main source of wealth. The decisions you need to make and the challenges that you face can be both exciting and daunting and require extensive research and planning.
How much you can afford to borrow may, to some extent, dictate where you can buy. Firstly seek professional assistance from a lending consultant to confirm your borrowing capacity before you start looking. Your borrowing capacity may be very different between lenders. With so many financial institutions offering so many options it is a good idea to shop around to find a mortgage that best suits your individual circumstances. Pre approved finance can mean the difference to the success of negotiations on a property. Likewise if you need to sell before you buy, having an unconditional contract on your current property will put you in a better position when negotiating the new contract.
WHERE DO YOU WANT TO LIVE?
Everyone in real estate will tell you one of the most important attributes to consider is “Location Location Location”. For most of us this does not mean ‘millionaires row’. However, you should consider growth areas with good access to local facilities, public transport, employment, schools, medical centres and shopping centres. Spend some time driving around different suburbs to get a feel for them.
Average prices will vary from suburb to suburb and in some cases from street to street. Do your research on house prices in the areas you have chosen. Information is available from websites, local real estate guides and local real estate agents. You may need to revise your expectations.
WHAT TYPE OF HOUSE DO YOU WANT TO BUY?
Make a list of what is important to you – number of bedrooms, bathrooms, garaging, two storey, single level, air conditioning, big back yard, low maintenance, outdoor entertaining, pool, suitability for pets, views or open plan living areas. Have you considered living in a gated security complex? Will your finances cover body corporate fees? Are you prepared to renovate? Decide on the features you just can’t live without and those you will be prepared to compromise on.
The internet is a great place to start your search. Many websites offer an email alert of properties matching your criteria as soon as they come onto the market.
Free real estate guides are available. Real estate agency websites, window displays, open homes and local newspapers are a great source of information.
BUYER BEWARE!
Having found a home that ticks most of your boxes please take into account the following:
- Is the area likely to hold resale value or benefit from capital growth?
- Obtain a pest and building inspection by a registered professional.
- If there have been any alterations or additions do they have the required council approval?
- Check with local council for future planning of new roads or development construction in the area.
- Are there any changes needed to make the home suitable and at what cost?
- What fixtures and fittings are included in the purchase?
- Are there any chattels included in the purchase? (eg: dishwasher)
- Are the council wheelie bin, TV antennas, clothes lines, children’s outdoor play equipment, pool equipment, and exotic plants included in the purchase?
- Is an approved electrical safety switch fitted?
- Are compliant smoke alarms fitted?
- Is settlement date timed to suit your schedule?
- Are contract conditions (if any) adhered to?
- Deposit (usually 10% except by agreement) is payable (as per contract).
- Go back to the property at different times of the day, night and the week.
MAKE AN OFFER
Once you have found your home, don’t wait or you may miss out. Don’t be tempted to make too low an offer. Others may also be putting in reasonable offers and if these are higher than yours you will miss out.
If you have done your research you will know what the value of properties currently are in the area and what is a fair and reasonable price to offer in line with the asking price.
Formalizing your offer on a contract demonstrates your sincerity and commitment to purchase. The contract is a legally binding document once agreed to and signed by all parties nominated on the contract. A licensed real estate agent can complete this task negotiating between parties until an agreement is reached. Please ensure that your agent explains in full all terms and conditions of your contract prior to you signing. Contracts are sent to the nominated solicitors or conveyancers who finalize the process.
We trust your buying experience will be a rewarding venture. If we can assist in any way please call Michael on 0413 436 256.
BUYING AN INVESTMENT PROPERTY
Creating a balanced investment portfolio to increase your personal wealth is these days considered essential for your financial future. Selecting the right investment property is the key to profitability.
Seek professional assistance from your accountant or a lending consultant to confirm your borrowing capacity first before you start looking.
- Your loan may have fixed or variable interest rates. It may be interest only or principal plus interest.
- You could include a credit facility to allow you to draw on the money.
- If you have equity in your current home or other investment property you may use this to borrow against your new property purchase.
- Consider minimising your tax obligations through negative gearing.
- Consider property tax depreciation.
- Consider costs involved – loan application fees, mortgage repayments, interest, loan insurance, landlord’s income protection insurance, building insurance, public liability insurance, solicitor or conveyance fees, pre purchase inspection reports, stamp duty, ongoing managing agents fees, ongoing utilities fees (rates, body corporate fees etc), and ongoing maintenance fees in addition to the purchase price.
Your financial adviser should discuss these options and a strategy with you to enable you to make an informed decision which best suits your current situation.
The secret to regular investment income is a property that is highly sought after by tenants, both in style and area, a property that is in excellent condition and well maintained (with limited outgoings), and a property that is proficiently managed on your behalf.