Buying your first (or next!) property is an exciting venture, but it can also be quite daunting – especially if you don’t know what to look for.
Note: Most investors find a property in a location they feel comfortable with, often around the corner from where they live, and then work backwards and try and justify it as a worthwhile investment.
I guess that's the reason why most property investors never get past the first or second property
On the other hand, strategic investors begin with the end in mind and understand what they hope to achieve from their property investments, they know what their endgame looks like, they build a strategic map or plan to get there, and then they follow that plan to ensure they don't go off track.
That way they know what's realistic and what's achievable and they also know what type of investments to avoid.
If a perceived opportunity doesn't point them in the right direction - the direction they have outlined in their strategic plan - then they bypass it.
Successful investors make more money by the things they say no to than the opportunities they say yes to.
With that in mind, this 12-point checklist for buying property should help you grow your wealth:
1. Set your long-term goals
Understand why you’re planning to buy that property.
Is it your next home or is it an investment?
Why are you investing – what size portfolio are you planning to grow?
This way you can set your investment strategy.
If you don’t know where you’re heading any road may get you there, but most roads can get you lost.
And that's why I suggested you start by building a Strategic Property Plan.
Attaining wealth doesn’t just happen, it’s the result of a well-executed plan.
Planning is bringing the future into the present so you can do something about it now!
When you have a Strategic Property Plan you’re more likely to achieve the financial freedom you desire.
2. Get your budget in order
First thing first: you need to get your budget sorted.
Do you spend less than you earn?
Have you saved a deposit?
How much spare cash do you have each month to service your loans?
There’s no point in even beginning your property search until you’ve completed this step because determining your spending level and what you can afford will narrow down your property purchase decisions.
3. Organise your finances
Property investment is a game of finance with some houses thrown in the middle, so having a finance strategy helps you not only buy your property but buys you time to ride the ups and downs of the property cycle.
While interest rates are at historic lows, there are many other important factors in determining the best loan for you, so it’s worth working with a finance broker to make sure you’re getting the most flexible loan structure to suit your needs.
Being prepared will make the whole process easier and put you in a better-negotiating position.
4. Research the market
Before making any investment decision it’s imperative to have access to reliable, researched, and interpreted property market, economic-financial, and demographic data.
Remember the location of your property will account for up to 80 per cent of its performance
The problem is, that most people only have familiarity with a couple of markets around where they live or in their state.
To ensure you only buy investment-grade properties, you need detailed Intel on all the major property markets in Australia, not just your own backyard.
At Metropole we have what we call our "Insiders Trading Team" - we have our own team of buyer’s agents in each of the 3 biggest capital cities.
They are ex-selling agents, with the type of perspective that money can’t buy, but you can hire it.
5. The right property
The Investor Journey involves initially building a substantial asset base and then transitioning to the passive recurring income (cash flow stage.)
Most investors never realise this.
At different stages in your wealth creation journey, you will require different types of properties to help you achieve your desired outcome.
At any one time, there are over 300,000 properties available for sale in Australia, but less than 4% of them are investment-grade properties.
At Metropole, we have what we call the 3-6-1 Buying Framework.
It starts with a top-down approach, you know, 3 from the top - strategy, location, budget.
Then the six stranded a strategic approach to selecting the right property followed by 1 in the decision.
We provide you with one recommended property.
It doesn't help if we give you 5 and tell you to choose one that still leaves you on your own.
We bring it down to one recommended property, 3-6-1.
6. Seek advice
But be careful who you ask advice from - most buyers' agents will only advise you to invest in their patch.
Sure a buyer's agent is an important part of your team, they act as your representative and will help you find, negotiate and purchase the right property.
While you could do this all yourself in between work, family, and other commitments, if you’re a novice when it comes to the property market, then a buyer’s agent can take a lot of the confusion out of the process and level the playing field.
Getting some expert advice from a property strategist can be hugely beneficial in formulating your strategy.
But in today's more complicated world, you'll need more than just a property strategist or a buyers agent.
You'll need someone from someone who can offer a holistic approach to property, tax, finance, future planning financial planning etc.
By the way...that's exactly what the team at Metropole does.
7. Be thorough
When you’re buying property, this is not the time to make rash or emotional decisions.
When you begin inspecting potential properties, check out how the toilet flushes, whether the taps all work, how strong the water pressure is in the shower, and whether the power points work.
Open cupboards and look for any signs of mould on the walls, ceilings, and in cupboards; you can never be too thorough and remember that if you buy the property, you inherit these problems (and their repair bills!)
8. Seek further advice
Once you’ve found a property that you’re seriously interested in purchasing, if it’s a stand-alone property rather than part of a block of apartments, it’s crucial to hire a building and pest inspector who can prepare a report for you.
They will perform function and safety inspections of the property and inspect the entire house, top to bottom, and write up an evaluation that details whether the building is up to code or not.
It’s also advised to have a pest inspection conducted too.
9. Be practical
It can be easy to become carried away with big goals and bold dreams of finding the perfect investments, but it’s important to remain practical about it.
Remember…no property will tick all the boxes.
However, if the property doesn’t stack up or if the price is too high, walk away.
There will always be other properties.
10. Negotiate!
Remember…you don’t have to accept the asking price.
You should always try and negotiate.
Of course, an experienced buyer’s agent can do this for you if it’s not your strong suit.
However, in the hot markets that still exist in some parts of Australia, it’s hard to negotiate a significant amount off the asking price when there are more buyers than there are good properties around.
But remember, you can negotiate over much more than simply the price.
Conditions such as the length and date of settlement, deposit, early access to the property and rent-back opportunities could swing the deal in your favour.
11. Enlist a solicitor
Conveyancing is an important process that facilitates the legal transfer of ownership of the property, from the vendor to the buyer.
A solicitor will take care of all the legalities involved and check the contract as well as advise you on contract conditions and clauses.
So be sure not to sign anything until your solicitor gives you the go-ahead.
12. Manage your Assets
To extract maximum returns from your assets you must undertake active structure, property, and tenant management reviews.
Through Metropole's Property Performance Management Service, we conduct annual portfolio reviews and make appropriate recommendations to ensure your properties are performing as expected.
ALSO READ: Your Complete Guide to Property Investment
