More Sites

Property investing: questions to ask before you buy

Reported by Pam Walkely
Monday, November 27, 2006

Mortgage calculator

You need the latest version of Flash Player.
Enjoy the most vivid content on the web
Watch video without extra features
Interact with applications on your favourite sites
Upgrade now
Companies forced to change their nameConflict in Iraq and Syria is causing serious headaches for companies who happen to share the ISIS moniker
From Money Magazine, November 2006

Margaret Lomas is a successful property investor, financial planner and author. She owns over 30 properties bought using financial planning principles, not emotions. She says: "We don't need special inside knowledge to pick a property."

Here are "20 must-ask questions" before you buy an investment property:

  1. What is the cash flow of this property? Have I taken into account all costs and can I afford to support it if it is negative?

  2. What is the vacancy rate of the area? Start at the Real Estate Institute (REI) website www.reiaustralia.com.au.

  3. What improvements are being planned for the area? Not all are positive; not many people want to live near a garbage tip or major entertainment venue.

  4. What is the population growth? Nil or negative growth is usually not a good sign.

  5. What is the competition? Look at approved development applications.

  6. Is the property tenant-friendly? Forget fancy fixtures and fittings that will be costly to repair and replace.

  7. What condition is the property in? Always pay for a building inspection and remember it's tax deductible.

  8. Does it have furniture? This is a must for a tourism property.

  9. Is there a body corporate? If there is, carry out a body corporate search.

  10. Is there a rental guarantee? Remember, a guarantee is only a promise which has no regulatory backing.

  11. What is the current property management arrangement? What does it cost? Does it work well?

  12. Is there a leaseback? Even though an operator is your tenant you need to check them out just like any other.

  13. In the case of a new or off-the-plan property, who are the developers?

  14. Is there a dual purpose, if this is a niche market (purpose-built) property?

  15. What is the land availability in the area? Scarcity will lead to higher prices.

  16. Is it close is a large city? Make sure it's easy to get to the city by both private and public transport.

  17. How old is the property? Older properties have less deprecation benefits.

  18. Is the property at market value? Research recent sales.

  19. Is the town you are considering based on just one industry? Avoid it.

  20. Are you being commercial in your approach?

For the complete story see Money Magazine's November 2006 issue. Subscribe now.

31/10/2014 02:11Sydney, Australia. 31 October,2014
advertisement