Tips for Buying

Excerpt from ING Direct


An investment property doesn't have to be your perfect dream home. If you don't intend to live in the property, remember to look at it with "investment eyes" only. Here are some more buying tips.

Research the property and the area
Research the capital growth history of the area and the potential rental income of the property. The local real estate agents are a good place to start.
If it's been rented before, check the tenant record. If you're investing in a unit, the managing agent will have a complete history of the unit and the apartment block. A small fee will apply for strata searches, but it's worth it.
It's important to invest in an area with rental appeal, e.g. close to schools, shops, transport, or close to parks and beaches.
Finding the investment property you want
The Property Buyers Guide is full of great information to help you buy the property to match your needs. It's a checklist where you can keep a record of all the properties you've seen. You can jot down everything from the address of the property and real estate agent's details, to the number of bedrooms plus services and facilities in the local area.

What's the right investment property loan for me?
Loans fall into three categories, variable interest rate, fixed interest rate and line of credit. In order to minimise your interest repayments on your investment you may prefer interest only repayments.

Who are Buyer's Advocates when they're at home?
Buyer's Advocates work for real estate agents and give professional advice on what property to buy or lease. They weigh up the investment risk and negotiate the best price

A fee applies for this expert service. In Sydney and Melbourne it's generally around $6000 or 2% of the purchase price.


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.

How to bid at auction
Once the auction starts you can make a bid at any time. You can do this verbally or non-verbally by raising your hand or nodding your head.

Bidding usually starts off in $10,000 or sometimes $20,000 increments. If you feel like slowing the increments down, you can offer an increase of $5,000 or less.

If bidding stalls, the agent may accept $1,000 and even $500 increments.

You need to register to bid
By law, you must register to bid at an auction. Take along your driver's licence as formal identification.