- Check what is being built around the same area: New infrastructure projects can be beneficial or detrimental to the property you are about to purchase as an investment. Log onto www.infrastructureaustralia.gov.au as this has links to all state infrastructure planning departments.
- To ensure the property is worth your investment (purchase price) have an independent valuer or real estate agent from the area give you a market appraisal. This will help to reduce your risk and save you money.
- Do your homework – what rental will the property be able to return to you. Visit www.domain.com.au and www.realestate.com.auto get an idea of rentals on comparable properties. Ask your accountant about the margin of return you will require to make your investment worthwhile.
- You need to consider whether your investment is for income from rental returns or capital gain and in the case of multiple investments, it should be the latter. The rental income will help you hold the property but it won’t help you buy again. Capital gain should be, in the early stages of investment, top of your list because it will allow you to buy your second and third property. If you look at high rental return and low capital growth, you’ll be sitting there a long time before you have any equity to do something else. This is a point to be discussed with your accountant, should you need a referral we would be happy to assist.
- What is included in your purchase Contract – including parking spaces and storage facilities and ensure these are reflected in the Contract. If you are purchasing a unit in Queensland, you should obtain a copy of the Community Management Statement, which shows details of the allotment of the car parks and storage. Ask your solicitor to ensure this information is noted in the Contract.
- Home unit properties incur a monthly maintenance charge, which is deposited into a sinking fund and used to pay for the lifts, grounds and carpets. Ask to see the Body Corporate Disclosure (it’s your legal right), which outlines exactly what’s been spent and what works are planned. For a small fee, you can have an experienced search agent look at the minutes of strata meetings and provide you with a detailed report. This will disclose whether there are any structural problems such as concrete cancer, broken lifts or works which have been scheduled to be done at some date in the near future. Always check the balance of the sinking fund in conjunction with any information disclosed by your search to ensure it has enough funds to cover any proposed work or whether a Special Levy has been proposed to cover the cost of such works.
- When deciding where to buy your investment property it is a good idea to identify your potential market. If you are considering a property close to a university you should be looking at a multiple occupancy homes close to transport and amenities. If, on the other hand, you’re going for the family market, look for a large home, with a garden and spacious communal area with amenities and schools close by.
- When you are borrowing to purchase an investment property you want your investments to be providing you with a return as soon as possible. Look for a property which will not need much renovation – a freshen up with some paintwork and a general tidy up are suitable. Steer clear of homes in need of structural improvements as these could be long winded and delay the rental returns on your investment.
For any information contact our Property & Commercial Department Manager, Christine Martin, Attwood Marshall Lawyers on 5536 9777 or email firstname.lastname@example.org.