If you’re looking to get into the property market and buy an investment property there are a lot of benefits to be had, such as wealth creation, capital growth and tax benefits, but since buying property is such a major decision that can take a huge financial toll it’s worth doing some thorough research on the property before signing that contract of sale.
So what are some of the things you should consider?
Finance for the Property:
Very few people can afford to buy a property without getting finance, so you will most likely be taking out a mortgage over the property. This will be the major cost going forward, so it’s worth shopping around and doing a thorough investigation of different lenders before making a loan application.
It’s important you find a lender who best suits your needs and take into account things like the interest rate, repayment frequency and the ability to redraw, amongst other things. Most banks have an online calculator that can give you a quick breakdown of your expected repayments.
When working out how much you need to borrow for the purchase you’ll need to consider more than just the contract price, as you will be up for other costs, such as stamp or transfer duty, loan fees and charges, rates, property management fees and upkeep of the property.
Also you’re investment property will most likely not have tenants in it 12 months of the year and there can be time when it sits empty between tenants, so ensure you can afford repayments during these times.
Property Location:
If you’re buying a property as an investment, then it’s worth considering where to buy that will be attractive to tenants, more so than your personal preference. Where you want to live may not be the same place that is most attractive to tenants.
A big thing to consider when it comes to the location of an investment property is its proximity to amenities, such as public transport, schools, universities, cafes, shopping centres and leisure facilities.
Hotspots on the Gold Coast at the moment lie along the route of the light rail, especially along the Gold Coast Highway, and also in the suburbs surrounding Griffith University and the new Gold Coast University Hospital. This includes the suburbs of Parkwood, Labrador and Southport. Varsity Lakes is also always good for student accommodation due to its proximity to Bond University.
While in Brisbane St Lucia is a good option due to its proximity to the University of Queensland, as well as Teneriffe, Hamilton and Newstead. Most inner city suburbs are seeing a lot of development of apartments currently, so there are so attractive new apartments on the market.
Type of Property:
Again, when purchasing an investment property, you are not usually buying somewhere you could live in, it’s all about what is attractive to tenants, so you need to consider the type of property you are buying.
While your personal preference may be for a large house on a block of land, it is more likely tenants will be looking for an inner city apartment close to work, or a townhouse within walking distance to university.
Once you’ve picked your location, do some research on the area and its demographics to learn more about the typical residents and what your potential tenants would be looking for in a property.
Market Research:
It goes without saying that a savvy investor will do their market research before buying an investment property. Emotion shouldn’t play a part in buying somewhere for investment purposes. You should make your decision on the basis of finance and logic instead, ensuring the rental yield you receive will cover, or come close to covering, your monthly expenses.
There is publicly available information on sales data and average rents and demographics of suburbs. Take advantage of this free information before diving into the property market.
Advice from a Conveyancing Solicitor:
Once you’ve done your research, picked your location and decided on a property the next step is to make an offer and sign a contract of sale. But before you do so, it’s a good idea to engage a conveyancing solicitor and have them review the contract for you.
They’ll be able to identify things that you may miss, or spot any potential problems. Most solicitors won’t charge for a review of the contract prior to signing.
Once you’ve satisfied yourself that you’ve found the perfect property then you can jump in and take your first step into the world of owning a portfolio of investment properties.