3 things to do before buying an investment property
Are you looking to purchase an investment property soon? Amid what is traditionally the busiest time of the year for property markets, make sure you’re buyer ready before buying an investment property.
With the spring season well and truly underway, property markets around Australia are entering a state of heightened activity in what is usually the busiest period of the year.
For those willing and able to buy an investment property right now, this can mean more stock on market, and subsequently a wider choice of properties. However, it can also mean increased competition as more buyers come to market as well.
With increased competition, investors need to be adequately prepared so they’re best placed when the time comes to make an offer.
So what should investors do to ensure they’re buyer ready? Here are 3 tasks to complete before heading out to the market.
- Review your household budget. While you should update your household budget as your circumstances change, you should review your budget before acquiring an investment property so you have an up-to-date understanding of your cash-flow position. You may have additional expenses or income that you have failed to factor in, which could have a significant impact on your borrowing capacity or general finances.
- Book an appointment with your broker. Meet with your mortgage broker to ensure your finance structures remain relevant and to secure pre-approval for an investment loan. The pre-approval will be more attractive to sellers and may be the difference between your offer and another buyer’s offer that is pending finance.
- Know what to look for. Many beginner investors aren’t aware of the different types of property investment options and what’s best for their individual circumstances. For example, typically established houses have high capital growth prospects but low rental returns, whereas the opposite is typically true of some apartments. Villas and townhouses also have their own pros and cons, as do commercial property investments and development properties. Therefore, investors need to understand what type of investment best suits their circumstances and needs, as this will save significant time when searching the market and attending open inspections.
For direct property investments, whether it be a house, townhouse or other, it’s important to act swiftly when you find a property that meets your criteria. This includes liaising with the sales agent to obtain the necessary information about the seller’s circumstances and placing reasonable, but strong, offers to best position yourself to secure the property.
However, even in the face of heightened competition, buyers should still complete adequate inspections, including pest, electrical and structural, for example, to ensure the property doesn’t present any surprise defects after settlement.