What you need to analyse before buying investment property
Category Newsletter
It is very important to ask yourself the following questions:
- Why am I buying the property?
You need to know exactly why you are buying the property which will avoid any hesitation and confusion. If you are looking to rent it out you will need to do as much research as possible to find out the sort of rental that you would be receiving. If you are buying for investment purposes, it’s important to separate your own personal tastes from those that will make the property attractive to renters or future buyers. It is also important to look at the growth rate in the area.
2. Can I afford it?
As soon as you apply for a home loan, your affordability will be scrutinised by the banks. A significant deposit will most likely also be required. Most banks will also take into account potential rental income whether or not you receive this rental income.
3. What are the additional costs?
It is also important for you to research the costs of refurbishment, maintenance, rates and taxes, and levies if it is a sectional title. Furniture is also very important. As an investment property some properties are advertised as furnished, therefore you should asses the condition of the furnishings and decide whether you will need to replace them. Banks do not provide bonds for furniture, therefore you will need to take into account this expense. There are also transfer duty and legal fees that you need to consider when calculating the costs of the property.
4. What do I need to know about the property?
You will also need to check the property and building for any structural damage, dampness and weak areas that will need to be replaced. The seller will be obliged to provide you with an electrical compliance certificate and, in certain municipalities or areas, a gas compliance certificate, a plumbing certificate and a beetle-free certificate. The beetle-free certificate can be waived by agreement between both parties.
5. What do I need to know about the value and rental prospects of the property?
Speak to your estate agent as they be able to tell you about the local property price growth and rental rates. If you are purchasing in a holiday rental block find out the rates for holiday rental during peak and off-peak season. Look at other properties that are for rent in the same block or area, as this will give you a clear indication of the sought of rental you will be expected to receive.
If you are able to answer all these questions then you are more than ready to purchase for investment. Prime Property has many investment properties available here
Author: Property24
