Method To Buying An Investment Property
1- Make the decision to buy. Buy doing this you have set a new goal
2- Have your finance approved. -This is a crucial step, and usually neglected until the last minute when you have found a home to buy. Find out what your purchasing power is and how it ties in with your budget. Do you need to buy cash flow positive, neutral or a negative geared property?
3- Find an area and start researching the homes for sale. Or alternatively start researching great growth areas this will find you an area. This can be a time consuming step, however is most important and where the serious money is made. Learning your area and its details is vital to being able to pick an investment property and confidently know what it is worth renovated, un-renovated, developed, undeveloped and how much you willing to pay. Knowing the past growth rates and key price drivers is risk protection and ensures you know what your buying.
4- This is a good time to do some research and find a good solicitor if you don’t have one. You need to ask them one important question among others- Do they invest their own money in buying an Investment Property and do a lot of their clients do the same (are they property savvy and familiar with its practices and laws). If you have a property coach or mentor this is also an opportune time to check in with them.
5- This time is also well spent finding a well experienced and qualified building and pest inspector. Ask them what their lead-time is if you do happen to be in a rush to get an inspection (during a short settlement time).
6- Once you have found your property through your now honed laser guided research and data, you can then start focusing on the one property. This could involve a long list of questions to the property agent, a friendly chat to the neighbors and a visit to the local council to check out zoning and restrictions. This will determine if the property is worth pursuing if it meets your requirements or you need to find another. You can in some instances sign a pre-offer agreement if the market is busy to secure your bid while you are researching the finer details to keep other bidders at bay.
Deciding To Go Ahead
7- If you still go ahead this is where you will make an offer (usually a signed conditional sales and purchase agreement) and start the fun and lucrative game of negotiating price and sales terms. With consultation with your solicitor ensure you have terms in the contract if you need to pull out for any particular reason (this could save you from an unwanted purchase). Always try to get a decent settlement term so you have enough time to get all your checks done and finance in place (banks can be slow in processing sometimes).
8- At this point you should have an agreed price and an counter signed contract with an unconditional settlement date. This means you are now closer to ownership. You have till unconditional date to have all your checks done and be ready for buying an Investment Property.
9- You now have to send a copy of your contract to your finance broker/ bank manager and your solicitor for final checks and approvals.
10- During this time you would have the property checked by your building and pest inspector. Go over all building extensions, alterations, and things that look out of place a builder would know about. Anything out of place could be negotiated down in the contract price to reflect the changes and problems.
11- Once all the checks have been carried out you can move forward. Your solicitor can officially confirm settlement with the selling party and it then goes unconditional. You are 90% of the way to buying an Investment Property. If there were any more negotiations and it sometimes doesn't go unconditional. Its common practice to extend settlement date so you still have sufficient time to negotiate, fix problems and reschedule settlement.
12- Once settlement is confirmed, both solicitors will book in a settlement time. This includes the banks representatives to transfer the money and respective property titles.
13- Settlement. Congratulations. This is the day all the money gets transferred and you take ownership.
14- If you are going to live in the property-Party!
15- If it’s an investment, property manger could be employed and all relevant tenant checks done. No Party though…
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