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Property Investment Tips
Property Investment Tips

Do your inspections

Get your building and pest inspections done. It will cost a little, but if you find problems it will save you a lot of money and headaches, in the long run.

Take a closer look

When you've found a property you're really interested in, here are just some of the things to look out for:

Make sure you inspect the property more than just once.
Visit it at different times of the day/night and week so you can gauge traffic and noise levels.
A rainy day is perfect to see if there are any leaks.
Are there any cracks in the walls (interior and exterior)?
If it is an old house and the carpet is lifting up in places, have a look at the state of the floorboards.
You may see signs of mould, white ants, borers or other problems.
Is there a musty smell? It may indicate rising damp or water damage.
Check the walls on the other side of the bathroom for signs of water damage/rotting wood.

Understand the contract

Your solicitor or conveyancer should read the Contract of Sale. Are you happy with what's included in the sale? Are all the fittings included? The outdoor BBQ? Tools in the shed? Any furniture? Ask as many questions as you need to feel comfortable. And make sure it's all written in the agreement.

What does "tendering" mean?

Sometimes, when there is exceptional interest in a property, a seller may decide that they'll only accept written offers or sealed bids. In this case you're best to speak with your solicitor first.

You can "tender" for properties at private sales and auctions.

Negotiating a price

You can only negotiate for private treaty sales. Naturally sellers want the highest price for their property and buyers want to pay the least amount. The seller expects you to make a lower offer, but not so low that it's out of the question. Generally, people are prepared to meet somewhere in the middle.

Tips for auctions

If you've never been to an auction before, the more prepared you are, the easier it is. To help prepare for the big day, read on.

Be prepared

Go to as many auctions as you can. They can be pretty nerve wracking first time round. Once you get a feel for them, how they run and what happens, you'll feel more confident when you're ready to make your bid.

Do your inspections beforehand

Get your building and pest inspections done before the auction. Once they accept your bid, it's all yours, including any potential problems.

Have your financials in order

You'll need a written loan approval before the day of the auction. Talk to us about getting a loan approval for the day. You'll also need the deposit, which is usually 10%of the purchase price.

When most people think of money-saving tips, they think of how to save on food, utilities, and discretionary purchases. But there are also ways to save money when buying investment property.

The most important tip is to do your research first and make sure that you're financially ready for the risk that investment properties bring. You also need to consider all expenses involved, including purchase cost and loan amount, and costs of carrying the property, such as taxes and insurance.

Before you start looking, define why you want to buy investment property.

Is it for an extra income stream? To eventually quit your job and make your living from investment property? To have a more comfortable retirement?

Your reason for buying an investment property will influence your choices along the way. Knowing your reasons helps you stay focused.

If buying investment property is a goal, but not an immediate one, consider letting Mint.com help you stay on track with its goal setting tools .

Then, when it's time to start scoping out properties, consider these money saving tips that can help.

Start as Owner-Occupant

With this strategy, you buy a property to live in that you will later rent out. If you occupy a house for at least a year, you can make a smaller down payment, particularly with HUD or VA -approved properties.

After you have lived in the house for at least a year, you find another house to purchase and move into, and rent out the original house. Rinse and repeat as desired. The obvious drawback to this approach is the hassle of frequent moves, particularly if you have young children. Make sure you and your partner are fully on board with owner-occupancy before trying it.

Become a Real Estate Agent

As money saving tips go, getting a real estate license may seem unusual, but showing properties, arranging sales, and making commissions aren't the only ways real estate agents make money.

Those who want to buy multiple investment properties can save money and get better deals by becoming licensed real estate agents first.

As an agent, you can save thousands in commissions with each transaction. If you only buy one investment property of $100,000 in a year, you can save $2,500 to $3,000 on commissions by acting as your own buyer's agent.

You'll also enjoy these advantages:

Access to MLS listings, which can help you find properties, and determine prices on comparable properties, which can help you make the most informed offer. Valuable contacts with people who can tip you off when great properties become available.

The possibility of more deductions on taxes as an agent than if investment properties are a sideline.

The cost of becoming a licensed real estate agent varies by state, but in Nevada (home of Las Vegas, one of the top cities recommended for real estate investment ), you can expect to pay $300 to $1000 for coursework, and around $1,600 for the required licensing.

Seek Seller Financing

Occasionally you'll find a seller willing to finance and allow you to put down less than 20%. If your lender offers to loan you 80%, you may be able to get the seller to finance the other 20%.

Or the seller may be able to finance a smaller percentage, which would still help you put down less than 20% as a down payment. However, it's not easy to find sellers willing to do this. Most sellers just want to sell, not finance a loan.

Look for homes with no loans against them or that say "seller financing" in the listing. Sellers' terms vary significantly, so don't expect great interest rates. Sellers generally want a premium when financing.

Ask the Seller to Pay Closing Costs

One of the more common money saving tips when buying real estate is asking the seller to help with closing costs. Seller financing may be rare, but you may be able to get the seller to pay for part of the closing costs as a condition of your offer.

Buyers often ask for a percentage of the closing costs to be paid by sellers. Sometimes sellers who won't come down on the price will agree to cover some of the closing costs in order to get their asking price. Don't be afraid to ask. Worst case is they'll say no and you start negotiations over.

If you're considering buying investment property, it is critical to think of it as a long-term investment. Even in the heyday of property flipping before the real estate meltdown, flipping a property required a lot of hard work, more work than most people realized.

If you can follow some of these money-saving tips, break even on the expenses and keep the property in repair, it should gain value over time. You should be prepared for the responsibilities of a landlord (or hire a top property manager to do it for you), and you need to be able to financially withstand a one or two month vacancy if the rental market is slow in your area.

Investment properties can be a terrific investment, or they can be disastrous. Knowing the market, your own risk level, and the level of work required is essential to succeeding as a real estate investor.


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