14 Jun Finding the ‘Right’ Investment Property – Dos and Don’ts
Finding the right investment property can be an overwhelming experience and has lead to new property investors choosing to forego their wealth creation journey. Here are our dos and don’ts when it comes to finding the right property for your investment portfolio.
Do Know What You Need
What you need, not what you want. You are buying a property for someone else to live in, who will pay you a certain amount of money. Your job is to collect the money and maintain the property insofar as you are obligated. Their job is to like property.
Purchasing the property you need involves knowing what it is that your investment portfolio needs. Begin with the numbers – do you need a cash flow based investment that will assist in debt reduction? Are you looking for a long-term equity investment that will yield high returns in the long run? Of course, you will be basing this answer on your existing portfolio, aspirations and strategies for growth.
Don’t Rely on a Bargain
Obviously, if you come across an incredible bargain then that’s terrific and you should buy it, but don’t assume that after a few weeks of looking around open homes and calling a few agents that you will find a property that is selling for $200,000 below what it is worth.
Investors who choose to only buy bargains, put themselves in an untenable position where all the stars have to align before they make a purchase. Recognise where the value lies, and make wise decisions based on facts.
Do Realise Nothing is Perfect
Just as you shouldn’t wait for the biggest bargain, you also shouldn’t hang around waiting for the perfect property. There will always be something wrong with a house or a section, because people have been involved. The kitchen is too small, the bedroom layout is weird, the section isn’t being adequately used, the list goes on and on. Interestingly, sometimes the, “oddest” properties can be the biggest bargains. If you can find a property with an obvious, but fixable, flaw it may be worth investing in resolving that issue and buying the property, because others may be put off and the price may be lower than it should be.
Don’t Listen to the Wrong People
You should take advice from everyone but only listen to those who are qualified. You should speak to the locals when you are buying in an area that you don’t know very well, but only listen to information that is useful. Useful is knowing where the schools are, and the types of families that live in the area. Not useful, is a recommendation not to buy a property from someone who is renting and has never owned a home in their life.
Seek advice from qualified professionals, and limit your attention-span to their expertise. You wouldn’t want to take legal advice from your accountant, so don’t take property investment advice from someone who isn’t qualified.