Invest in Property: Getting Started
Buying real estate is one of the biggest decisions in your life, so don’t leave it to chance and be as prepared as you can.
The main areas that you want to work on are:
1. Set Yourself a Budget
There are two parts to this. Setting an overall budget on what you plan to buy is paramount. This will give you scope on what you are able to buy based on this amount. If you are unsure of the costs to take into consideration (e.g. stamp duty, legal fees, buyers agency fees, mortgage costs) then the next step should be able to educate you on these. As a very rough guide, allow for approximately 5% of the purchase price for those costs listed. Then plus the amount of your deposit you plan to use, with 10% being the minimum reasonable amount. Take your total savings amount and work backwards from there.
You should also set yourself a weekly amount that you are comfortable in spending on your investment property. Do not set an unrealistic figure but allow for a lifestyle that you are happy with, then calculate the amount you are able to put into the investment. Depending on your available weekly funds will shape the type of investment property you should be aiming to purchase (e.g. higher vs. lower yielding).
2. Financials: Get Yourself Pre-approved
Meeting with an independent mortgage broker to get your finance pre-approved is definitely the next step. By all means use your bank, though we refer to mortgage brokers as they have access to the best finance deals across the market. Depending on your situation and strategy, particular structures and lenders will benefit you more with your purchase.
Your finance broker will require a long list of documents to make the pre-approval application, though this is a one-off. You won’t have to reapply with these documents when you purchase, unless your pre-approval expires during this time. The turnaround time on your pre-approval should be 1 – 2 weeks, then you are good to go.
3. Your Buying Brief
The figure on your pre-approval does not need to represent your maximum buying figure (this is the approach of many first-time property buyers). With your budget already set, hopefully your pre-approval figure is above this number. The next step is to finalise exactly what property you are searching for.
Articulating your Buying Brief will list all of the facets of your target property. The location, price range, features of the property (type, bedrooms, bathrooms, land size, orientation, parking etc.) will all be included. Your financial research can help with setting the budget, and diligent research will help you set the rest of the parameters. The online property portals (realestate.com.au and domain.com.au) are great starting points, outlining what is for sale along with what has sold in specific areas.
4. Meet With the Pros
More and more property investors are enlisting the help of professionals in their quest for the best possible property. Buyers agents or buyers advocates are becoming increasingly popular with investors of all ages and price ranges, as they try and give themselves an edge over the rest of the market. Meet with a few buyers agents and gain an understanding of how they work, and their points of difference. You will want to have some form of connection with them as buying a property is a personal process. If the buying process becomes difficult you want to be able to get along with your buyers agent, otherwise the relationship will fall apart.
Preparation for any big decision is so very important. When it comes to investing in a property, follow the right steps to make sure you are in the best position to purchase. Meet with the people you should meet with, and do your own research. Getting yourself into a “buying position” is the key in this whole process.