10 STEP GUIDE TO BUYING AN INVESTMENT PROPERTY
Thinking about investing in a rental property but not sure how it all works? Check out our 10-step guide to understand what’s involved.
1. Before you begin, know what you’re aiming for
Consider the goals you hope to achieve. Are you looking for extra income from regular rent payments? Or is capital growth your main aim?
2. Crunch some numbers
Do the maths to be sure a rental property fits easily into your budget. Plan well for purchase costs like stamp duty and for regular property-related expenses like council rates, insurance, repairs and maintenance.
3. Get to know your borrowing power
Your borrowing limit plays a big role in the type of property you can afford to buy. This is also an ideal opportunity to discuss the investment loan best suited to your needs.
4. Check out listed properties
Start inspecting properties for sale. Buying as an investor is quite different from choosing a home to live in. You don’t face restrictions like the need to be close to work or family. However, it does pay to look for properties with broad tenant appeal such as good schools, close to transport, university and facilities.
5. Have the contract reviewed by an expert
When you’ve found a property that ticks all the boxes, ask for a copy of the contract and give it to a solicitor/Conveyancer or a Financial advisor/accountant.
6. Arrange a pest and building report
An independent pest and building inspection will confirm whether the building is structurally sound and free from destructive creepy crawlies.
7. Make an offer
Depending on the health of the local property market, put a written offer in to the agent.
8. Exchange contracts
Success – your offer is accepted! At this point you and the vendor will each sign a copy of the sale contract, which is then handed over (exchanged) to your respective solicitors /conveyancers. You will need to pay a deposit, usually 10 per cent of the purchase price.
It usually takes 4-8 weeks following exchange of contracts for your property purchase to be finalised (or “settled”). During this time, your solicitor/conveyancer will work behind the scenes completing all the necessary paperwork to transfer the property into your name.
10. Appoint a good Property Manager
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Finally Sit back, relax as your property generates returns.