Top Tips for Investors
08 Jun 2016
When purchasing an investment property we would recommend the following when carrying out your due diligence of the property:
1. Order a Registered Market Valuation. It is quite likely that valuations will vary in the assessment of market value from valuer to valuer, as valuation is considered an art not a science. A valuation will provide insight to evidence used to arrive at the assessed market value and this can be weighted in your decision when purchasing a property.
2. Check Current Rental and Rental Potential for the Property. Ensure an independent rental appraisal is sought or check current rental is in line with the market by searching statistics on sites such as the Tenancy Services Website.
3. Is there likely to be capital gains in the areas you are looking at purchasing or not. Whether or not a property will benefit from capital gain is likely to impact on the yield a purchaser may require. Typically areas where significant capital gains may be expected will tend to have a lower yield than those where capital gain is less likely.
4. Check the title/zoning/hazards of the property as this will affect what can be done to the property in the future. For example, purchasing a property with the idea of building a minor household unit in the rear yard will be dependent on the size of the site, what activities are permitted within the zone, whether or not the property is located within a flood plain etc. Likewise a cross-lease title may restrict what can be built on the site requiring consent from other cross-lease owners and additional expense in updating flat plans. Leasehold properties will require one to also consider the terms of the lease, rent reviews, additional costs in ground rents.
5. Be aware of all costs (Rates etc) associated with the property and any hidden cost. We thoroughly recommend ordering a Building Report. It is always wise when purchasing a property to be aware of any upcoming maintenance the property may require. High cost of repairs will impact significantly on the rental return.
If you require any further information, please do not hesitate to contact us.