Buying Your First Investment Property in Melbourne? Read This.
While the idea of buying your first investment property in Melbourne may be exciting, it brings with it a level of complexity and stress that you may not foresee. There’s much more involved than simply signing your name on the contract. The process can be overwhelming, especially for one who lacks knowledge about the entire process.
For buyers considering property investment in Melbourne, it’s critical to take precautionary measures before making the final decision. Entrenched in a complex web of processes and regulations, real estate transactions are best handled by professionals and experts who understand the risks and their equivalent mitigating elements.
Investment Property in Melbourne 101
We’ve devised a crash course on some important things you need to know before the ‘big buy’:
1. Beware of any “free advice” offered—it will almost always cost you.
From project marketers to sales agents, many parties in the real estate industry will have their eyes on the commission pie. No one gives you independent or unbiased advice if they all work for the vendor in the property transaction. More often than not, any “free advice” they give is actually ‘sales advice’ and is backed by a property they are trying to sell. In short, they will not think twice trying to convince you they’re giving you a good deal on a property that may not serve your needs or that is simply not a smart investment to make.
2. Know your personal risk profile and be guided by it.
Here, risk refers to how much loss you are willing to expose yourself to, in return for a certain level of gain. Real estate investment and the strategies involved are complex. Be wary of those who try to market concepts or their services to make it look simple, as they are bound to either confuse you in the process or ultimately separate you from your money. Understanding your personal risk profile will help guide you in making fact-based decisions to ensure you only purchase an investment property in Melbourne appropriate for your risk profile and needs.
3. Determine how much debt you will be able to handle.
As much as we want to manage our finances ourselves, making big decisions such as property investment in Melbourne will demand more money expertise than you are likely to have. This is where a mortgage broker will be most helpful as they will have the right network of people and access to lenders who can help you buy property in Melbourne. They will help determine your borrowing capacity and provide the best loan structuring for your real estate needs.
4. Understand your limitations in terms of knowledge and skills in buying investment properties in Melbourne.
From research to negotiation, finances to the actual acquisition—the whole process of deciding to purchase a property in Melbourne takes a broad yet specialised skill set and impeccable industry knowledge that unfortunately not everyone has. Understand that this large purchase entails a high level of risk. Putting a substantial amount of your hard-earned money into the wrong property can be disastrous. Get help and advice from an independent buyer’s agent or buyer advocate. They can help you with most aspects of the process such as researching, searching, negotiating and purchasing among others. Paying for a buyer’s agent to help you is often cheaper than making a mistake or losing time (and therefore money) if a rising or fast moving market.
5. Have your potential investment property checked by professionals.
Hire the services of relevant professionals to check various aspects of your potential investment property. Get a pest inspector, building inspector and the like to investigate and identify any cosmetic or structural problems that the property may have. This is a risk reduction process where you are able to determine additional costs or expenses you can factor in before considering any subsequent offer.
6. Ensure you have contracts checked by a solicitor or a conveyancer.
As soon as you’ve decided on an investment property in Melbourne, it is imperative to have the contract reviewed by a solicitor or conveyancer to ensure every aspect of it is thoroughly reviewed and nothing is left to chance. They should be able to help point out any areas of risk in the contract so you are well informed about everything that the contract entails. If you have special conditions to add to the contract, they will be able to help you outline those and insert them accordingly.
7. Get the services of a good property manager.
Once the property contract is unconditional, obtain the services of a property manager who will manage your asset on your behalf. Take the time to carefully evaluate and select a credible person to be trusted with your investment property in Melbourne. Ask around for recommendations from professional associates, relatives and friends who have had positive experiences.
For more information or assistance with investing in property, get in touch with our friendly team of buyer’s agents today.