Six Simple Steps to Buying an Investment Property

property investor handbook six simple steps to buying an investment property Published by 2 property investor handbook six simple steps to buying an investment property 23 3 Welcome If you’ve just opened this mini e-book, the chances are you’re thinking about investing in property. Perhaps you’re a first-time investor, or one of the 1.7 million Australians who already own an investment property and you’ve decided to buy another one. Whatever the situation, this short e-book, based on our experience in both real estate sales and property management, should help. It outlines some six simple steps to follow – from initial research to in-depth research to closing the deal. Of course, there is a lot of other information out there and

the Property Investor Handbook is by no means exhaustive. But it should help you buy your next property investment whether you’re a client of ours or not. (Of course, if you do become a client, and we certainly hope you do, then there’s a whole host of reports and help we can give you along the way – right down to negotiating the price on your behalf if you’d like.) But right now, let’s begin at step one. Contents get your finances in order 4 Work out your objective 6 Work out where to look 8 Create a shortlist 10 assess the shortlisted properties 11 negotiate the price 13 next steps 15 4 property investor handbook six simple steps to buying an investment property 4 Step one: Get your finances in order Getting a loan pre-approved means you will know exactly how much you can afford to spend, and if you’re planning to buy at auction, you’ll need a written loan approval before the hammer falls. Be aware too that lenders have different requirements for investment properties than for owner-occupied homes and different loan ratios specifically for company title and warehouse conversions. According to Mortgage Choice senior corporate affairs manager Kristy Sheppard, ‘Prospective buyers must be aware that lenders have tightened loan assessment criteria for investors as well as owner occupiers.’ ‘Many have limited their loan to value ratios to 90% of the purchase price for both buyer groups, with some going even lower.’ ‘Also, genuine savings are essential, whether in the form of a cash deposit or existing property equity,’ she says. ‘Both buyer groups need to plan ahead to satisfy their chosen lender’s requirements.’ Using the equity in your own home or equity from another investment property is a great launching platform for buying an investment property. For example, if your home is worth $700,000 and you owe $350,000 on your mortgage and you want to invest 10% of the equity ($35,000) into another property, you should be able to do so as long as you can comfortably afford the repayments. Pooling resources with family friends or colleagues can also help you enter the market, although you should have a solicitor draw up a contract outlining each party’s responsibilities and percentage of profits before taking the plunge. There are also many different types of loans on the market, including line of credit, interest only and principal plus interest....

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