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Buying Your Investment Property Key considerations when buying rental property
Understand how much you can borrow
Before heading off buying rental property, seek advice from your chosen bank or independent finance broker. Getting a firm understanding of your financial picture will enable you to set some boundaries and financial goals before you start looking in an unobtainable location. It is always good to be prudent when borrowing money, especially when starting out on your investment journey. You have to learn to crawl before you can walk.
Do your research on the market that you want to buy in
There is no doubt that the best results will always come from focus. That means once you have narrowed down what the bank will lend you, drill down on where that money will be best spent to achieve the most positive financial outcome for you. There is a lot of free information out there about the property market including, where to buy, what to buy and why? The free information feed is now so plentiful on property that it can be confusing, so again stay focused. A good plan is to educate yourself a little on the general market and then speak to some individuals or property professionals. These should include, (but not limited to) real estate agents, valuers, builders, property research experts and property buying advocates.
Stay focused on a group of suburbs and a property type
Once you have made your choice and you are comfortable on the ‘WHY’ of where to buy and what to buy, stick to the plan and really become an expert in that/those areas. In doing this you will get to know local agents and by attending open homes and auctions get a feel for what the property might be worth in the market at that time. Buying property is probably not your day job so it is natural to feel overwhelmed.
Offer confidently and Negotiate hard!
When a suitable property is found, it is important to put forward an offer with confidence. Knowing exactly what you can (and want to) borrow coupled with your local knowledge gained over several weeks will fill you with the necessary confidence to put forward an educated offer. Putting offers in on multiple properties and not following through on any can be very annoying for real estate agents as they think you are a time waster. Equally, not putting an offer on any properties can portray you as a tyre kicker and agents may not take you seriously. There is a need to find a balance and negotiating on price is only one part, many vendors may want you to be flexible on terms. This means that if you have a short or no finance clause and a short building and pest clause it gives the vendor more assurance that you are a prepared buyer and more likely to complete.
Have all your professional service providers ready
Being a prepared buyer also means that you are not chasing around for a building inspector or solicitor after you buy, you know who you will use beforehand and you have made contact with them and discussed you plans. This will not only save you time, but pre-selecting these people will give you comfort that they are the right people for the job.
An important resource for Queensland landlords and tenants is the Rental Tenancies Authority,
For more information, please call us or email us.
