6 STEPS TO BUYING A PROPERTY!

Purchasing a property is often one of, if not the most expensive purchase a person will make in their lifetime. For that reason, this can be an incredibly stressful process for most people and is therefore important to have the right information going into this journey to limit any anxiety/stress surrounding investing in property. Afterall, it's exciting to buy a property and investors should relish the fact that they're able to make this purchase using their hard-earned money. 

This article will go through 6 steps to buying a property that I hope will provide you with sufficient information to help you on your journey in property investment. 

1. Creating a plan

Buying a property is often very exciting for most people and far too often do we see investors hopping straight onto real estate websites and trying to find the best property possible. But here's the problem, it's impossible to find the best property without first outlining what you're looking for and the purpose of your purchase. 

It is important to ask yourself questions such as:

• Am I purchasing property to live in or for investment?
• Will I be financially stable if I go ahead with the purchase?
• Would I prefer buying a house or a unit?
• How close do I want to be to my property if using as an investment?

Asking yourself the questions at the beginning will help push you to a more accurate research for properties that fit your property plan.

2. Source professional advice

I've always been the type of person that won't pay for professional services if I know I can do it myself at a fraction of the cost, however, when it comes to property investment this completely changes. The way I see it is that there are people who work every day within the property industry that have a wealth of knowledge at your disposal. With a purchase as large as a property, I see it as money well spent on professionals as they are likely to help save me even more money in the long-term and will help build a foundation for my property portfolio of structure your personal home purchase.

There are many professionals you can seek throughout the process, but I believe the two most important are an accountant and a mortgage broker. Your accountant will be able to provide you with advice on how a property purchase can impact your taxable income and a mortgage broker can aid in seeking the best loan deal for you that aligns with your property plan. 

Other professionals that may prove to be especially useful include, but are not limited to:

• Real estate agent
• Buyer's agent
• Builder (to carry out inspection pre-purchase)
• Financial planner
• Property valuer

3. Obtain loan pre-approval

Now that you have solidified your property plan, you can seek to get pre-approval on a loan through your mortgage broker. This process involves your mortgage broker collating all your income and expenses in order to calculate the maximum amount of money that you can borrow. The importance of completing this before placing an offer on a property is that the amount of money you can borrow will dictate the maximum price you can purchase. For example, if you obtain pre-approval for a loan of $600,000, you will be able to purchase a property of a value up to $750,000 (assuming you have the money to pay a 20% deposit).

This is often a step skipped by investors. You don't want to be placed in a situation where you overbid at an auction without knowing your borrowing capacity and end up winning without an approval for any loan. It's always good to be prepared!

4. Search for your property

So far, we have established our property plan, sought professional advice and obtained pre-approval for a loan. Now let's search for a property!

Your property plan will dictate which property you're looking for and in what area. For example, if you're for a property to buy and live you may only want to look in a specific area that is most beneficial for travel times to amenities such as schools, work, transportation services etc. On the other hand, if you're looking for an investment you will be looking in areas with future growth potential and low vacancy rates in order to obtain a return on your investment. 

There are countless factors that go into searching the right property and this can be quite an extensive process. For this reason, it may be wise to source a reputable buyer's agent that can search a suitable property and help put your mind at ease that your investment will be worthwhile. 

5. Perform Due Diligence

Once you've found your desired property it is crucial to perform sufficient due diligence to ensure that you're paying the right amount of money for the property. As mentioned prior, a buyer's agent can help with this and provide a checklist before you place a bid. Things you may be looking for can include defects on the building, a crazy neighbour, degrading foundation, flood or fire risk etc. Also worth mentioning is that just because you hire a professional to perform these tasks, it is always important to conduct your own research because at the end of the day it is your money that will be invested into this property, so you should invest your time into researching!

6. Make your offer 

Submitting an offer prior to an auction or bidding on auction day, both can be extremely stressful. The important thing to remember is to not let your emotions get the better of you. Remind yourself that you have done the amount of research necessary to know the value of the property and you have a ceiling to what you can spend based upon your loan pre-approval from step 2. Having faith in this will help alleviate the stress and ensure you don't bid for more than what you can afford or alternatively, pay more than what you have valued the property at. 

Summary

Remember, missing out on a property isn't the be all end all, there will always be plenty of opportunities that await you in the property industry. I believe following these 6 steps will help you on your way with your property investment and make it a much more pleasant and stress-free experience!

Let me know your thoughts in the comments or contact me at thesleepinginvestor@gmail.com or on Instagram @thesleepinginvestor.

Cheers,

TSI