8 STEPS TO INVESTING IN PROPERTY

Investing in the Great Australian Dream 

Property has long been a favoured investment option for Australians looking to grow their wealth. And for good reason. The Australian property market continues to produce positive, long-term wealth creation opportunities - if done correctly.

If you are thinking about purchasing your first investment property, then ensure you do your research and follow the recommendations from experts in the field.

We have compiled our top 10 steps to property investing.

1. Assess your Personal Financial Situation

Before you take your first steps, the most important thing is to assess your financial situation. It definitely helps if you have a household budget that clearly indicates your income and expenses. This will allow you to see at a glance, the amount of cash you have to invest and work with.

• Do you have enough for a deposit? (generally anywhere between 5% - 20%)
• Do you have equity in your current home?
• Do you have allowances for ongoing costs associated with the property?

2. Define your Goals

If you are investing with your partner, friend of family member, it is important to discuss your goals and vision for the property. How long wish to hold on to it for? Is it a short-term or long-term investment? Knowing where you want to be in the future will help with your investment decisions.

3. Talk to Your Accountant

Before you commence talks with the bank, discuss both your financial situation and your goals with your accountant. They will be able to advise on the tax implications of your investment. They are experts on all things ‘investment’ including depreciation and negative gearing.

4. Get Pre-Approval

As tempting as it is to get out there and start hunting for your property, gaining preapproval from your bank will set you in good stead. It will also save time when it comes to putting in an offer as preapproval is already in place. Preapproval will set you guidelines for what you can afford. So straight up, you know the price range you can afford. This will help you to avoid finding the property of your dreams and not getting finance approved to buy it. The bank will also include all borrowing costs that you may have missed, including:

• Purchase price of potential property
• Loan application fee
• Conveyancer fees
• Stamp duty
• Legal fees
• Lenders Mortgage Insurance (if borrowing more than 80% of the property’s value)

5. Employ a Conveyancer

Once you have found your property and put in an offer, you will need a qualified conveyancer to take over the contract and settlement process. Find a conveyancer in your state that can assist you with this process before you start your hunt. Ensure to lay out their fees so everything is clear in advance.

6. Find Your Investment Property

Now you have a clear budget and goals in mind, you can confidently begin your search. Dependent upon your goals, the key things to consider when finding the right property include:-

• Location – is the property in a highly sought-after location?
• Demographics – who lives in the area? Young families, retired, professionals? Which rental market are you appealing to?
• Rental return – what is the rental return in the area and vacancy rate?
• Development and infrastructure – are there any proposed developments on the horizon that will drive people to the area?
• Facilities – is it close to schools, transport, shops, highways?

7. Putting in an Offer and Purchase

So you have found a property and are ready to put in an offer. Verbal and written offers can be made to the agent and presented to the vendor. Negotiations may continue around purchase price and conditions. Generally, the

• Finance clause – anywhere from 7-14 days to get your finance approvals.
• Building and pest inspections – again, generally 7-14 days from contract.
• Settlement – terms of settlement from when the contract is signed. Generally 30, 60 or 90 days.

Always ensure that the terms suit you and do not rush on any of the above. Building and pests generally cost around $500 and it is the best process money can buy. It will detail any faults or issues with the home you are looking at.

8. Engage a Property Manager

Managing the tenant process can be a daunting and complicated one. We advise to leave it in the hands of the experts. They can discuss with you your ideal tenant and value the property for rental return, find tenants, vet tenants and look after the entire tenancy for you. Ensure to get a thorough detailing of their services including:

• Tenant application and vetting process
• Rent arrears policy
• Inspections – how often and how are reports delivered?
• Communication preferences
• Who does the inspections?
• Will you have a dedicated property manager?

Investing in property is an exciting venture, and one that requires careful and education decisions and management. It can create great rewards and wealth creation opportunities for those who take the time to do it right!