1. Set Your Budget

• Determine the amount you can afford to spend;
• Meet with a mortgage broker to pre-approve your finance, by doing this you can determine exactly how much you can afford to spend on a property. It is usually safe to purchase a property within 90% of your pre-approved loan amount;
• Ensure you allow money for purchase costs (generally 5% more than the selling price) and it is always recommended to allow a buffer of 5% for any unexpected costs.

 2. Start Browsing

• Define your investment objectives
• Create a short list using the ‘7 Vital Signs’

Select 2-3 projects (properties) to that broadly look like these could best match your needs. And evaluate each of them one at a time by;

There are three key (3) categories to consider for research when evaluating a suitable investment property;

i) Area information,

ii) Physical attributes of the property,

iii) Financial attributes of the property.

Within these categories are sub-categories we call ‘Vital Signs’ and by knowing these in advance a properties performance can be measured against your investment objectives.

Below are the ‘7 Vital Signs’ that may be relevant in identifying a property to best match your needs;

a. General

i. Property type (Apartments, Office space, House & Land, etc)

b. Price range

i. Refer to your budget

c. Location

i. State / suburb

ii. Population movements

d. Performance

i. Special offer (price discounts etc)

ii. Gross yield

iii. Net yield

iv. Capital growth

e. Capital growth potential

i. Synopsis – Unique features of the property

ii. Government or Major industry / area initiatives underway or planned

iii. Additional information – Demographics, Local Government Snapshot

f. Property Purchase Price – is it at market or below?

i. Check Comparisons + Valuation

ii. Offers maybe submitted, acceptance of the offer rests with the vendor

g. Liquidity

i. Investment Index Score – is focused on evaluating the ability to both rent and on-sell a residential property.

ii. General appeal of the property

• Use the online investment calculator to select 1 property

The online calculator has several input variables; by altering each you will be able to consider different risk scenarios including holding costs and potential future gains. This is a powerful way to test the performance of your short listed properties against each other. Including a vital property performance indicator; Net Rental Yields can also be calculated.

If you require any assistance please contact us.

A word of caution

a) Property is a long-term (15 years and more) investment, thus any future predictive capital growth speculation shown on the website by any third party provider, should be measured with a word of caution: Future predictions cannot be determined by past performance for any asset class.

b) Historically property has grown in value but there is NO evidence of a regular property cycle: the period for a property to double in price vary greatly from round Australia. Some speculators use the term “Peak-to-Peak” to describe a property doubling. Australia’s national historical capital growth 7-9%. (source REIA). Property has also grown at a greater rate than inflation by 2.7%-3.5%. (Source BIS Shrapnel)

c) Be mindful of the risks associated with investing in property and how to potentially mitigate such risks. Please learn about the risks associated with property, click here to learn more.

Please contact us if you would like to receive a copy of our Investors Guide to Evaluating Investment Property

 3. Secure Your Property

• Select a property from your shortlist to reserve – this can be done by clicking ‘reserve’ on the price list page for the relevant property. You have the option to submit an offer (e.g. lower price); acceptance of the offer rests with the vendor;
• Once you have reserved a property, you should:
  - Notify your solicitor to expect a copy of the sales advice and contract
  - Prepare the required deposit
  - Make an appointment with your solicitor to sign the paperwork and arrange payment of the deposit