10 Questions to Ask Before Investing in Property
1: Is there a high rental potential? The last thing you want is to have an empty property because you will have to pay the mortgage. Before you make a purchase, ask for a rental appraisal. Properties are typically over or under priced and an appraisal will provide you with an accurate picture.
2: What is the competition? If the market has got too many investors, you reduce your chances of a good rental return. You can easily get reports that be able to tell you what percentage of the homes in the area you want to invest in are owner occupied.
3: What market are you targeting? It is crucial that you identify the type of tenant you would like so that you are familiar with the type of rental property they are interested in.
4: What is the state of the body corporate accounts? There are certain properties that require you to pay body corporate fees. This is deposited into a sinking fund which is used to pay for things such as carpets, lifts, and ground maintenance.
5: What other constructions are being built in the area? New constructions being built in the area that you wish to invest can be detrimental or beneficial to your investment property. Therefore, find out what is being built in the area before making an investment.
6: What is the property value? The amount that your property is being sold for is not an indication of the value of the property. Do some research to assess the value of the property before making an investment.
7: Rental return or capital gains? You will need to make a decision on whether you are investing because of capital gains or rental return. Rental income will assist you in keeping the mortgage paid and capital gains will refers to the potential for the property to increase in value.
8: How much work will you have to put into the property? If you have to renovate the property, you will have to wait until it is ready to put it on the market. You should stay away from homes that require structural improvements because you will have to wait for months before you can rent it out to tenants plus this will be a lot more expensive.
9: What is included in the sale? Don’t make the mistake of assuming that everything is included in the sale of a property. Make sure that you identify exactly what is for sale and what isn’t. This includes things such as storage facilities and parking spaces. You will need to make sure that this is reflected in the title search.
10: What is the local market like? This is an area that is often overlooked, but what is happening in the local area can have a direct impact on the property market. The best way to find out is to do your own research, a good place to get answers is the Australian Bureau of Statistics.