How do we choose the right real estate agent?
One of the most important elements when choosing the real estate agent to represent you is ‘trust’. An agent offering you the lowest commission rate and/or the highest appraisal is not necessarily the best option. To make your selection easier, take the advice of the professionals:
- How many properties did you sell last year and last month? - How many buyers are you working with at the moment? - Can you provide me with an example of your marketing campaign? - How many salespeople do you have in your team? - What charges will I incur if the house doesn't sell? - If I am not happy with your performance, how do I cancel our agreement? - Can you provide me with a list of your past clients and testimonials? - How often will I receive feedback on the progress of my sale? - Can you provide me with 3 recent sales in the area, similar to my property, and what they sold for? - What is the average house price in my area? - Do you have similar properties to mine currently for sale?
- Ask your colleagues, family, friends and neighbours if they are able to refer you to a proactive agent
- If you are unable to receive referrals, search the internet for reviews from past clients of local agents
- When you interview your potential agent, ask the following questions:
Thinking of investing in property?
Great idea. We'd love to help you get started, however, it’s important to have a clear long-term real estate investment strategy. Are you going for high rental returns for the short term or are you more interested in long term capital growth?
If you’re thinking about investing in property for the first time, it’s important to seek professional advice.
Investing in property has several benefits, including the potential to:
- Generate capital growth – increase in the value of your property over time
- Generate rental income and yield – annual rental income less maintenance & mortgage costs
- Gain potential tax advantages associated with negative gearing – you can deduct the costs of owning your investment property from your overall income, reducing your tax bill.
What should I look out for?
If you’ve decided that investing in property is the way to go, it’s important to recognise that the way you might choose an investment property is very different from how you would choose your own home. Some points to consider:
- Buy a property that fits your strategy, e.g. do you want to negatively gear, are you interested in commercial or industrial real estate, do you seek properties which you can improve?
- Understand all the expenses including, stamp duty, strata levies, council and water rates, property management fees.
- Consider getting Landlord Protection Insurance to cover you if the unexpected happens.
- Whether you can cover mortgage repayments if the property is vacant for a period of time.
- Choose a loan that suits you and consider an interest only option, as it will lower repayments and increase your cash flow.
- Keep up to date on the latest property trends.
Is it better to buy an apartment or house?
- Do your research to find out what the market demands locally.
- Talk to a First National Real Estate agent to find out what’s popular in different regions.
- If you have a location in mind, focus your research on what type of property is in demand, historically, in that area.
- If you plan on building a portfolio of properties, a mixture of houses and apartments is a good strategy.
- Some investors like to buy apartments because the Owners Corporation looks after the common property and overall building management. Some dislike Strata Title quarterly levies and the risk of ‘Special Levies’.
- Apartments are usually less expensive so the answer may lie in affordability.
- Some property investors believe apartments are too similar to one another and that houses offer more potential to differentiate and add value.
- Investors who buy houses must bear 100% of the costs of maintenance whereas strata title and community title owners share costs.
Which is the better property investment; a new or existing home?
- Older properties are sometimes cheaper than new ones, depending on the location and condition of the property.
- Older homes offer charming period features and, often, higher ceilings, quality timber floors and unique architectural features.
- Older properties may need renovation of major systems such as heating/cooling, wiring, plumbing, roofing, but they can offer significantly more margin for renovation and profit.
- New homes are designed to suit today’s fashions and lifestyles. They’re more likely to appeal to a wider market of tenants if well located.
- New properties may be entitle you to claim depreciation, giving you extra tax benefits.
Should I buy a property 'Off the Plan'?
Buying a property before it has been built comes with a raft of advantages and disadvantages: For
- If the market is rising, real estate purchased off the plan can be worth more than the initial price paid by the time construction is complete and settlement comes around.
- Speculators may quickly realise a substantial capital gain, just days after settlement, having really only invested their initial deposit.
- You’re buying something that doesn’t yet exist and can’t be 100% sure it will be exactly what you expect or that it will actually be completed.
- If you’ve speculated on a quick profit and the market falls, or there is limited demand when the time comes to sell, losses can be large.
- Developers can often alter the plan, based on obstacles that arise during construction, sometimes leading to a larger or smaller property than originally expected.
- There’s no certainty as to the quality of the completed construction at the time of purchase.
How can I make sure I am not paying too much for my investment property?
- Make your offer 'Subject to Satisfactory Valuation' and stay in touch with your Lender who will order a valuation while processing your loan. They will generally provide a conservative valuation. If you’re not happy, you may withdraw your offer.
- Research your chosen suburb and attend as many Auctions as possible before you bid.
- Look up recent sales in the area using agent’s websites.
- Purchase a Suburb Report from a respected data house such as RP Data – www.rpdata.com.au.
- If you are not confident, use a buyer's advocate.
Do I need landlord insurance and what does it cover?
Landlord Protection Insurance gives investors some protection in the event that a tenant stops paying rent, abandons the property or inflicts malicious damage.
How much can I borrow?
Before you start looking for an investment property you need to know how much you can afford to spend and repay.
- Your annual income; - Your monthly expenses; - The type of loan and current interest rate; - Repayment type (principal or principal and interest); - The loan term (number of years to pay the loan back); and - Estimated repayments.
- The amount you can borrow will depend on a number of factors. Use a loan calculator to get an estimate.
- Your Lender can give you an idea and/or a pre-approval on your borrowing capacity, which is usually valid for three months. This gives you an accurate estimate of what you can currently afford, taking into account: