An honest reality check before purchasing a property can be the difference between a good and a bad investment. Ask yourself these questions before you sign on the dotted line:
1. Does this property fit the profile of my ideal tenant?
For example, if you are looking to rent to a family, is there access to public transport and schools?
2. Can I afford not only the mortgage, but ongoing maintenance?
Ensure you have up to date information on what your obligations are as a landlord in terms of maintaining your property and its utilities.
3. Have I factored in the chance of vacancy in my finance calculations?
It is recommended that you keep approximately 3 months’ worth of mortgage repayments in the bank as a buffer.
4. Has my Conveyancer/Solicitor been through the Contract of Sale?
Ensure you have a trusted Conveyancer on your side to advocate on your behalf with the vendor, agents and mortgage lender.
5. Do I have a realistic picture of the rent I am expecting to receive as income?
Do your homework now, before you sign on the dotted line. Check out local listings and talk to local real estate experts to ensure you know exactly what the market is doing in the area.
6. Does this property need any major works done and, if so, can I afford it?
Although some people do like to renovate a home with the vision to sell it at a higher price (also known as “flipping”), when you invest in property for the long term, extensive renovations may not be wise. The rental return on a major renovation has the potential to not live up to expectations and increases the risk of a loss on your investment.