Investment property buying advice

There are many factors that prompt someone to sell a property, so it’s good to have a clear understanding about the reasons behind a property being placed on the market. These can be useful when it comes to negotiating the price.

Do your research

Dodgy neighbours; flooding from a creek running behind the property; or just a change in an area's demographic make-up can all be reasons why a property is on the market. Local shops are usually a great source of handy information. Take the time to go and chat. Enquire at the local council if there are any development applications in the area or environmental issues that could affect the property. Check local crime statistics too.

Never make an offer on a property until you have taken steps to determine its true market value, and how viable it is as a rental investment. Research recent sales values and current weekly rents in the area, and make enquiries about the tenant history of the property you are interested in.

If you are satisfied that everything stacks up, you can start your negotiations with an offer that is 10% below the asking price. However in a sluggish market it can be worth pitching your first offer at 15% below the listed price.

Mortgage Choice broker tip

PropInvestbuyingadviceB1150x156.jpgThere is no 'perfect' time to invest - it all depends on what you are aiming to achieve. Some factors to consider include:
The health of the overall economy, including the employment market.
The state of the property market - are prices rising or falling? Is there an under/oversupply of homes?
Current vacancy rates.
The level of inflation - rising inflation could boost capital gains.

Buying at auction vs. private treaty

A private treaty sale is where the seller (or 'vendor') sets a price and the buyer enters into private negotiations. These negotiations are usually handled by the listing estate agent. Once a price is agreed, the buyer typically pays a deposit worth 10% of the agreed sale price, and depending on the state the property is located in, there may be a cooling off period in which the buyer can back out of the purchase.

While a sale by private treaty can take days or even weeks as negotiations are ironed out, buying at auction tends to be a very rapid, adrenaline charged process.

The whole sale process can take a matter of minutes, and once the auctioneer's hammer falls the sale is final with no cooling off period for the buyer. It can be worth appointing someone to bid on your behalf. This prevents you being swept up in the hype of the auction and bidding beyond your budget. At the very least, attend a few other auctions first to see firsthand what the process involves. See more about buying at auction.

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