Organise your deposit

A deposit can be organised with:

  • savings,
  • a deposit bond,
  • equity in another property, or
  • funds in an SMSF.

Have your loan pre-approval in place

Knowing how much you have to spend gives you the confidence to make a calculated offer on your property of choice.

Choose the right property in the right location

Research your chosen suburb by checking all advertised listings in newspapers, the internet and real estate agents. Make sure that you know the price of recently sold comparable properties and the area’s average rental yields. Choose an investment property with your head, not with your heart.

Sometimes investing in property in another state is a better financial option. Keep informed by reading reports on national property updates and best performing suburbs. Usually capital cities outperform regional areas, however some coastal options have also seen very good growth.

Make an offer

For properties sold by private treaty you will need to make an offer to the listing real estate agent. Obtain a copy of the contract for sale and organise for your conveyancer/legal representative to check it. Properties being auctioned may be open to offers prior to the auction date. If you buy at auction you will usually be required to pay a deposit of 10% on auction day. The contract for an auctioned property is unconditional and no cooling off period applies. If bidding at an auction, make sure that your conveyancer/ legal representative has checked the contract and organised pest and building inspections before you bid.

Appoint a conveyancer/legal representative

The contract for sale should be given to your conveyancer for advice and checking. The conveyancer will advise you of your cooling off rights (vary from state to state). Once the contract has been signed by both parties and exchanged, the contracts are legally binding. The contract will indicate when the deposit will have to be paid. If pest and building inspections have not been carried out, it is advisable that they are ordered by the conveyancer.

Final loan approval

We will organise the loan document for the balance of the purchase price to be prepared and signed by you.

Appoint a property manager

When loan approval is in place a property manager should be appointed so that tenants can move into the property as soon as settlement has been effected. A good property manager will source and retain quality tenants, collect rent, conduct inspections and organise repairs and maintenance on your property. They will provide you with a schedule at the end of the financial year showing rental income, repairs and maintenance and property management fees for taxation purposes.

Insurance

Your lender will require you to organise building insurance (except in the case of strata title properties). Most investors also invest in landlord insurance.

Final inspection

Arrange for a final inspection (just prior to settlement date) with the real estate agent. Check for all inclusions in the contract of sale and that they are in working order. Check light switches, power points, air conditioners, exhaust fans, hot water, swimming pool equipment and security systems and request copies of all manuals for stove, dishwasher and other relevant inclusions.

If your property is interstate perhaps have a friend inspect it for you or jump on a cheap flight and do it yourself. Costs associated may be claimed with your tax return.

Settlement

Your conveyancer/legal representative will attend to settlement. This is the day on which the balance of the purchase price is paid to the vendor. Stamp duty and lender’s mortgage insurance will also have to be paid. You can collect the keys from the real estate agent once settlement has been advised.

If something goes wrong

If you have signed a contract to buy a property it may be a costly exercise to withdraw even if you have not reached settlement. If the cooling off period has passed, the contract is binding. If you wish to get out of the contract you may be liable to pay compensation to the vendor. The amount will depend on the loss suffered by the vendor and is usually based on the amount it would take to re-sell the house including any loss on the subsequent sale. Read your contract carefully and be aware of the consequences of defaulting on the contract. If you do not wish to proceed with a contract, seek independent legal advice as soon as possible.