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How to Avoid Costly Mistakes Buying Investment Property?

WOW! Are you thinking this is an exciting time to be a real estate investor and buying investment property?

 

Buying investment property…did you get the raw end of the deal when you’re buying investment property? There are so many steps where factors can go wrong in the buying process. Steps you may be aware, others you may not even see coming until it’s too late…

Property investors usually learn the hard way by trial and error throughout their property investment journey, and of course this more often than not results in poor decision in context to investments underperforming and a lot of lost time, money and energy.

What if you’re prepared to mitigate risks in the first place? Buying investment property, wouldn’t you want to be armed with as much knowledge as practical to avoid pitfalls?

buying investment property
Buying investment property with a focus on successful investment properties in highly sought-after locations

Here are some of the most common buying investment property mistakes encountered by property buyers:

Paying too much because you didn’t what you wanted and how to effectively negotiate. Did you know nine times out of ten, a third party negotiator would be able to achieve lower price and better deal than if the buyer was to go it alone?

There’s so many buying investment property factors which come into play as you’re negotiating a property purchase, it’s often the hidden motivations and emotional process which brings buyers unstuck.

Rushing in and signing the contract…guilty of this in the past? Are you not clear on your goals and expectations? Under pressure or are resources thin? Maybe the sales agent claimed you’d miss out if you stalled?

Would you know what to look for in a contract to ensure you were fully protected legally? Too many buyers jump in and sign contracts too soon before understanding the deal and reviewing all the details.

When buying investment property, are you leaving yourself exposed and wide open? Don’t be fooled by the so called cooling off period because penalties still apply if you change your mind under this clause and of course, the consequences of this mistake will cost you.

Buying investment property, in fact have you bought the wrong type of investment property? Ever left decisions to the last minute because you’re unorganised, busy or unexpected emergencies took your time?

If you rush into making decision you’re bound to overlook and make devastating mistakes, right? Why would you want to get stuck with an investment property you didn’t want because you had to make a fast decision?

buying an investment property with equity
Buying investment property with equity

Buying investment property can be divided into two simple steps:

  1. Allow adequate time
  2. Do your research

In your contract, buying investment property check list, always make sure you allow for building inspection and pest report. If it’s written into the contract, make sure you’ve booked your building inspector, allowing enough time to thoroughly review the report and negotiate the findings?

Did the real estate agent recommend someone or did you find a building inspector independent of their suggestion? Its always a professional courtesy to take on recommendations, however some agents form strategic alliances with inspectors to get sales through.

Buying investment property and running out of time for finance? Losing the property because bank needs more time or contract date has expired, vendor terminates contract and real estate agent sells it to someone else… property lost and you’re back to square one.

Buying investment property in this scenario happens more often than you’d think, however the situation can be avoided with closer attention to how finance is arranged prior to buying investment property, right?

Buying Investment Property

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Why Buy Investment Property?

Before you buy investment property, you could ask yourself a few simple, yet powerful questions.

 

The content is general in nature and it’s important for investors which may be contemplating buying investment property to note further investigation is required in order to identify specific properties for investment potential…

According to Australian Bureau of Statistics (ABS), 97% of people aged 60 or more are in some way reliant on a government pension. In case you don’t know how much a pension is worth, imagine trying to survive on $15k pa (if single) or $24k pa (for a couple).

(a) Debt free family home still doesn’t produce income for utilities, food, transport, hobbies, and holidays

(b) Superannuation will be nowhere near enough to replace the income required to live life on your terms

(c) A “rule of thumb” formula for calculating the size which your investment portfolio (net of all liabilities) needs to be is to multiply the required income stream you want by 20.

For example: Required income (debt free) x 20 = Investment portfolio value (net of liabilities) $80,000 pa x 20 = $1,600,000

(Above figure excludes the value of your family home and does not factor inflation)…

buying investment property
Buying investment property with a focus on successful investment properties in highly sought-after locations

First question, “am I buying investment property or (PPR) principal place of residence? Next, “why would I buy investment property”? The answer to both questions is where to buy and what area(s) you know or feel comfortable?

Buying investment property or principal place of residence in context to if you are going to live there?

Generally speaking, any in market it is important to understand capital growth cycles, (structural change which is occurring) your target market (demographics, right style of property for right location) and population growth.

Key is understanding how the contract does not get in the way of closing deal because the contract must protect the interests of you as the developer and ensure settlement takes place smoothly. Of course, you want the maximum financial return, right?

Investment property has many different purposes, you are wanting to maximise your wealth via property investment so you need to factor your capital, borrowing capacity, lending institutions combined with macro and micro indicators.

Buying investment property involves due diligence with a clear strategy to focus on, which can give you real confidence you are investing based on correct research criterias and more than just a gut feel.

Buying investment property the infrastructure investment: The government and private enterprise spend billions of dollars each year on roads, transport, hospitals, mining, resources etc…

Look at what they are spending funds on and what impact the infrastructure has long term in those areas.

Buying investment property the populatIon growth: The Australian national population growth rate was 1.7% or 394,000 new residents in Dec 2012. Take note of where those people are moving too. Is it a capital cities, regional cities or regional areas? We also look at interstate migration, which is generally associated with employment opportunities or lifestyle choices.

Buying investment property the economy and employment factors: What is the diversity of industry? Consider what business/industry is in the area you are investing in.

Does area have a cross section of industries that can support current and future employment or is it reliant on one main industry?

Buying investment property the supply and demand relationships: Is there an oversupply or undersupply of residential housing? If there is an undersupply you are likely to see increased rental income and improved cash flow for an investor.

In this scenario you will also see a lowering of the vacancy rate. Undersupply could also put pressure on property prices. With an oversupply the opposite normally occurs for an investor. Rents decrease, vacancy rates increase and property price can decline.

Amenities: The better the amenities are the more attractive an area become for people wanting to rent. Look for good employment, schools, shopping centres, medical facilities, sporting facilities and café lifestyle.

Transport is a very important consideration: Look for a combination of good public transport and does it service the area well especially in the exact areas you are looking to invest in?

Buying investment property and rental yields: Rent yields are determined by the supply and demand of property. When investing it’s finding the balance between your rental income and cash flow.

If there is an oversupply of rental properties your rental income will reduce. This affects affordability and holding costs for investors.

Value: Look at the price of the property relative to similar properties in the same area. This will give you an idea of the real value of the property. Also consider the likely resale value by looking at the properties that are currently being sold in the area.

Design: Take a good look at the design of the house. Is it practical? Will people want to live in it? Does is have good natural light? What aspect does it face? What is the internal size of the property as this could affect future resale?

Projected Capital Growth: When you look at the macro and micro indicators to help you decide where to invest you give yourself a strong opportunity to see long-term growth with your property.

You can clearly see the crucial relationships of due diligence and number crunching in conjunction to all the above and using these macro and micro indicators which can really help you answer the big and important question, where do I buy?

If you want to know more about  buying investment property please click here to contact us.

Buying Investment Property

Buying Investment Property | How to safely profit from Australian resources boom?

Buying Investment Property 

Buying investment property? Are you a property investor you’re looking for opportunities before other investors hear about them, right? Want a high yield positive cash flow property?

Press the play button to watch this video, please watch and listen closely because the booming mining sector is offering you the greatest property investments opportunity in Australia today…

Buying investment property – Gladstone has always been an industrial powerhouse, although the queue of mega-­projects dwarfs most other infrastructure hotspots. There are two massive projects that have received the go ahead from companies concerned, LNG and Origin Energy.

In addition there’s a list of finance, personal investing ideas and strategies with colossal projects almost too big for this special real estate report, briefly these include an Alumina refinery, gas pipelines, coal port expansions and much more.

In fact, its big business with investments in coal seam gas to LNG industry which is the biggest with thousands of extra employees needed for ongoing operations and more during construction.

Buying investment property; here’s how to get instant access to your exclusive insider-only special report revealing why profits are set to soar. If you’re ready to take full advantage click here to buy right now for ONLY $495.00!

positive cashflow property
Positive Cash Flow Property - Buying investment property with goals of renting it out, the right location is key.

Want to find out why mining is supercharging the Australian economy? Keep reading because here are the investment rental property facts and why some regional areas are being targeted by savvy property investors:

  • Global organisations and government are investing heavily.
  • Properties located in this specific mining area are in prime position to benefit from billions of dollars pouring into this region
  • Demand is creating chronic under-supply of dwellings
  • Families, workers and new businesses are targeting mining areas to relocate, more accommodation is urgently needed to satisfy demand
  • Ready to go land is in short supply, putting upside pressure on property prices
  • Increase bottom line by adding additional safe revenue streams
  • Experience extreme rental returns of up to 15% and higher…

Get instant access to detailed report prepared by leading Australian Property Analyst. Simply
tell us where to send you this sought after Buying Investment Property Resource Pack (vaued at
$495.00), which can be yours today FREE!

Grab your special report commissioned by one of the four big Banks: 

  • Find out why banks describe the resources and commodities boom as one of the greatest economic opportunities in Australia’s history…
  • QLD Government report revealing the true extent of mining boom in coming decades and hard to find details allowing you to laser focus with pinpoint accuracy on areas set to profit

You’d agree a savvy property investors primary reason for buying investment property is to get capital growth over time and positive cash flow to increase their property wealth. Gladstone or Calliope is it right for you?

Calliope has a population of over 4,000 and Gladstone has a combined current population of 60,000. Gladstone is Queensland’s busiest harbour with $80 billion of estimated resource projects either under construction or in advanced feasibility stages.

In addition substantial investment is planned for more infrastructure, which means a substantial inflow of new jobs to the Gladstone region is expected to reach 10,000.

Queensland’s Department of Infrastructure and Planning estimate the workforce required to implement these projects can easily grow the local population in Gladstone region by 31% in first 5 years alone and more than double in size in 20 years.

Gladstone rental and residential sales markets have so much activity and resource investment in
the region this could be your opportunity to invest for long term growth, which Gladstone should
be able to deliver.

If you’re buying investment property with goals of renting it out, location is key. Homes in high-rent or highly populated areas are ideal. Gladstone, Mackay and Toowoomba are expected to experiance growth in 2012 due to the mining areas.

The Gladstone median house price increased 10.5% to $440,000 as recorded in Q3 2011.

Buying Investment Property: Mining, tourism and agriculture, are three major industries. Queensland accounts for 24 per cent of the total Australian mining production, 37 per cent of Australia’s beef production, and almost all of Australia’s sugar production…

Buying Investment Property