Purchasing an Investment Property as your First Purchase

Many first home buyers seek to live in their new purchase.  But there is another option: buying an investment property.  For many reasons, it makes perfect sense to buy an investment property as your first home.  Read on to find out why.

Buying an investment property first may help you achieve your ultimate goal of owning your dream home in a number of ways:

1. Buy where you can afford

Investing in real estate allows you to buy a good home in a good area that you can afford, even though it may not be the area or property type you wish to live in.  It gets you a foot in the market.

2. Someone else pays the mortgage

With an interest-only home loan, your rent ought to cover - or almost cover - your loan repayments.  This means you get the benefits of owning property - capital growth - while someone else (your tenant) pays for it.

3. Tax benefits

Your accountant can speak to the many tax benefits of having an investment property.  Just about every expense related to the property becomes a tax deduction.  Remember to get a tax depreciation schedule - no matter how old your property is.

4. Capital growth

Capital growth is the increase in the value of the home over time.  Generally speaking, we can pursue either rental yield or capital growth in properties.  It is not easy to find both high capital growth and high rental return in the same property.  Capital growth is arguably the more important feature because wealth from real estate provides the opportunity to re-finance and buy more properties.

Cautions

1. If you're planning on renting - it's not always smooth sailing.  Landlords sell.  Landlords renovate.  Landlords move in.  For many reasons, you may not be able to renew your lease.  But - if you find a great home and are in a position to rent it long term - that is brilliant.

2. Speak with your accountant who can advise on the wisdom of a "rentvesting" strategy.

3. Understand that property is not very liquid.  This means it cannot easily be turned into cash, should you ever need cash fast.  Property takes time to sell, and costs of selling (and purchasing) are high.

4. Appreciate that while well-chosen investment grade properties almost without exception appreciate in value, there may be periods of time along the way when the property price is actually down.

What do People Look for in their Next Home?

Ever wondered what sorts of things make a property attractive to buyers?  The following list can help you to determine if the property you're considering buying is likely to be bought for a premium - because it is so attractive to so many buyers.

1. Mobile and internet reception: in today's life, these are seen as essential.

2. Crime rates. People want to live in safe suburbs, particularly tenants who may feel limited in their ability to make their home safer.

3. Trees. We chop them down at a rate of knots, but we actually value them for their inherent beauty, shade and the wildlife they attract.

4. Public transport: people value being close to public transport. Note, this is close to, not next to. People generally like to be within a 10-minute walk of a train station, and a 2-3 minute walk of a bus stop.

5. Cafes and restaurants. People love to be close to these. It's the ability to walk around the corner and grab a coffee, meet friends and be close to activity.

6. Access to parks is an important one. With so many people having a furred friend, access to parks is important. See #3 above.

7. Shops are important: proximity to, though, not right next to. People generally like their homes to be quiet, but close to hubs and activity.

8. Close to work: people dislike being so far from work that they spend hours traveling each week. Being close to work is a huge bonus. See #4.

So, if the home you're viewing ticks a lot of these boxes, chances are it's going to sell quickly.  If you want it - you need to act quickly and decisively.  If you need a hand assessing due diligence on a property and negotiating the purchase, sing out.  I'm here to help!

Contact Me

Surviving in Sydney's HOT Property Market

A recent Financial Review article details a recent auction night where the auction room was packed so full that people were occupying the street outside the auction room!  Auction clearance rates in Sydney's Eastern Suburbs near 100%, and as many as 50% properties sell prior to auction or off-market.

So how is a property buyer to survive in this market?

The sorts of complaints I hear every day are:

1. Turning up to open homes, only to find that the vendor already has a buyer in mind - but is offering one final open home just in case they can better the offer

2. Homes going for much more than the sales agent indicated

3. Needing to be quick - almost a sense of not having time to adequately and accurately evaluate the home before it is bought - by someone else

4. Not knowing of all the properties that eventually become sold

5. High prices

6. lack of affordability

7. All that's "left" on the market is the "not-so-nice" homes; all the good ones are snapped up

What tips can I share with readers to assist?

1. Be prepared: have your finance ready and also a deposit. If you don't have pre-approval and a deposit, you're not in a position to buy. It's like walking into a shop to buy something with no money in your wallet (and no plastic). Get your finances sorted and a deposit - and agents will take you seriously.

2. Know what you want: this saves you time inspecting and researching properties that are not going to be suitable for you.

3. Match what you are seeking with what is available in the market: both in the suburbs you're looking at and your price range.

4. Be flexible and adjust to what is available in your chosen suburbs - or choose other areas that offer what you're after in your price range - or, do what many are now doing: buy an investment property that you can afford, while you rent where you want to live

5. Be decisive. once you've found the home you want to buy understand that other people will probably also want to buy it.

If you need a hand, contact me.  I offer flexible and affordable property buying options designed with every-day home buyers and investors in mind.

CONTACT ME

The Best Tips for Buying your First Home (or your next one)

For many people, buying your first home - or your next home - can be tough.  Really tough.  Sydney prices continue to rise and just when you thought you had enough saved up ... it is no longer enough.

It's exciting to look through internet photos of gorgeous homes, dreaming of where you’d put your things, how you'd feel to live there and so on ... and then reality hits.

Saving up for a deposit can be difficult - saving for anything can be a challenge.  The trick is:

1. Work out what you can comfortably go without

2. Use less of the things you can use less

3. Repeat

4. Increase income where possible: take a casual job, even just a few hours on the weekend.

5. Set a budget - and stick to it.

6. work with a buffer for unanticipated expenses - but hold yourself accountable with this buffer. Movies and dinner every week are not buffer expense items. Buffer expense items are things like: the computer died and needs to be replaced; a period of illness that increases your medical expenses.

Getting a loan

Usually, lenders will require evidence of regular income and savings from the past 3-6 months (if employed) or up to two years (if self-employed).  Keeping that information handy is really helpful.

If you're self-employed, perhaps in a new business, and you know it'll be a couple of years before you're able to get a loan, use that time to reduce your expenses to the bare minimum and boost your income wherever possible. Reduce your credit card limits.

The government offers the First Home Owner Grant for people who are purchasing their very first home. Eligibility criteria apply though.

Use an experienced mortgage broker

An experienced mortgage broker knows how to get you the very best loan and loan structure for your needs.  It's not all about the interest rate; the structure of the loan is just as important, and also be sure to check the comparison rate.  It often tells a very different story!

Once you have a deposit saved - or are close, seek pre-approval for a loan

Meet with a mortgage broker and be honest about your situation.  Submit all of the required documents as soon as you are able, and with any luck, you'll have pre-approval within 1-5 days.

Pre-approval and a deposit in place

The next step is to engage a buyer's agent to locate the best property for your needs, and negotiate the purchase price down where possible.  Your first home sets you up financially for life.  It's important that the home be one that is likely to appreciate in value and continue to meet your needs.  A buyer's agent can sort the best properties from the not-so-good properties, ensuring that your hard-earned deposit and mortgage repayments are working to assist your longer-term finances.

Is there a Secret Property Market?

A recent news article  suggested the existence of a "secret" property market. A market where, "savvy home buyers and investors avoid the pitfalls of buying at auction, where emotions run high and the quoted price is woefully unrealistic." This property market is the market of off-market properties - those properties that, for many reasons, are never advertised to the general public.

Properties that are never advertised to the general public?

Surely that would be absurd: how is a property meant to get sold if it is not advertised, and surely vendors achieve better prices for their properties when they are advertised?

The tides are turning

Enter the age of buyer's agents: skilled real estate agents who work for and on behalf of buyers, rather than vendors.  Agents who use their knowledge of the market, properties, buyer behaviour, vendor behaviour, skills in analysis and synthesis of data - to put together a package service that fully and solely represents the buyer. 

What about the vendor?

Vendors have traditionally been represented by selling agents.  For many and varied reasons, some vendors are now choosing to sell their properties without the services of a real estate agent.  They may wish to save on commission, marketing, property styling and other costs; they may prefer to sell their property themselves; or they may prefer privacy in the process. 

Provided an agent - whether it be a selling agent or a buyer's agent - is able to bring together both parties to the transaction, there may not be a need for both parties to be represented by their respective agents. In the same way that selling agents maintain databases of buyers, buyer's agents maintain databases of off-market properties for sale.  For buyers wishing to access off-market properties, engaging a buyer's agent is definitely the way to go.  Not only do those buyers have access to all of the properties that are advertised, they also have access to those properties that are off market - including those that are not being represented by selling agents.

At Melissa Maimann Buyer's Agent, I offer a service that provides clients with access to off-market properties for a very reasonable fee.  Contact me today to find out more.

Before you Engage a Buyer's Agent

You're excited and ready for your first or next property purchase and you've decided that a Buyer's Agent is best placed to help you through your journey.  Before you engage a buyer's agent, here are some things you can have in place to make it smooth-sailing:

Consider who you would like to use as your conveyancer / property lawyer.  If you are stuck for ideas, your buyer's agent can suggest conveyancers / property lawyers who can assist.

Ensure that you have pre-approval for a home loan.  A Buyer's Agent can't commence searches until you have pre-approval for a home loan in place.  If you already have pre-approval, ensure that there haven't been any material changes in your circumstances since applying.  Material changes include such things as being made redundant, changing jobs, starting a business, having a baby / becoming pregnant (congratulations!), a pay rise, or a change in the loan type eg from an investment loan to a principal place of residence loan).

Ensure that you have a deposit for the property price bracket that you are considering purchasing.  A deposit is at least 5% of the purchase price, and sometimes 10%. 

Ensure that you have another 4% of the purchase price available to pay as stamp duty.

Ensure that you have some additional funds to pay your buyer's agent.

Consider what you want to buy in terms of purchase price, location, dwelling type and so on.  Your buyer's agent can make suggestions to make this process easier for you.

So there you have it! If you're considering a buyer's agent, contact me now for an obligation-free appointment to discuss your situation - I'd love to help!

Are you Ready to Buy a Property?

Buying a property is an exciting time and there are a few things to do in readiness for your first / next purchase.

The first step is to save for a deposit.  Generally, you can exchange contracts on a property with a deposit that equals 5% of the purchase price.  A 10% deposit is preferred.  In other words, if you're purchasing an $800,000 property, as a minimum, you'll need a $40,000 deposit, but an $80,000 deposit is preferred.  You can borrow from friends / family or obtain a deposit bond if you're short.

In terms of your home loan, preferably, you'll have a 20% deposit, as with anything less than a 20% deposit, you will need to pay Lenders Mortgage Insurance.  A deposit of at least 20% will mean you pay less across the life of your home loan, and save you money in the long run.  That said, you may be best to use a 5% deposit if this is all you have and it means you can enter the property market, rather than waiting to save for a 20% (or even 10%) deposit.  Property in Sydney is going up at at least 6% per annum, so every month that you are out of the market, you are potentially losing money.

You'll need an excellent mortgage broker to assist with your loan.  A mortgage broker has access to all of the various banks and can recommend the best loan for your needs.  You'll need to complete a home loan application and obtain conditional pre-approval for a loan before you start your property search, so that you understand what budget you can work with for your property purchase price.

Once you have a deposit and pre-approval via a mortgage broker, your next step is to engage the services of a property lawyer or conveyancer.  This is a person who can review contracts for sale/purchase and advise on the legal side of your purchase.  You can engage their services and then when a suitable property comes along, request them to review the contract for sale/purchase and provide advice.  Retaining their services in advance means you have an established relationship prior to your actually needing their service. 

With a deposit and conditional pre-approval, you're ready to purchase a property.  Contact Melissa Maimann Buyer's Agent and she can assist with all other aspects of your property purchase from searches and inspections to negotiating the sale with the sales agent.

Strata Laws: Changes Ahead

New strata laws will commence 30th November, 2016.  They laws have been modernised in line with living needs in strata blocks in 2016.  These laws are important for purchasers of homes because more than a quarter of NSW's population lives in, owns or manages a strata property, and strata properties form the bulk of investment property purchases.

Some key changes include:

• Increasing the accountability of strata managers

• Allowing owners to use technology to conduct meetings, vote, communicate and administer their scheme, for example using email to vote and having notices disseminated via email. Social media and teleconference may also be used to hold meetings.

• Changes to the process for the collective sale and renewal of a strata scheme

• A simpler, clearer process for dealing with disputes

• Broadening tenant participation in meetings: currently, tenants cannot participate in body corporate meetings

• A new option to manage unauthorised parking, including the issuance of fines

• Changes to the process to be followed for planned renovations. Only a 50% majority vote will be required (general resolution). A special resolution (75% majority vote) will be required for major changes to the exterior of the property.

• Strata committees will replace what was previously known as the executive committee

• Strata buildings will be inspected for defects against the new Australian Standard, which will be introduced as the standard for inspections. There will be mandatory defect inspection reports, and the developer will need to prepare a maintenance schedule. This will increase the accountability of builders and enable defects to be identified and corrected.

• Changes to proxy voting will prevent an individual controlling owners' decisions by obtaining a majority of proxy votes.

• By-laws will be introduced to address smoke drift into units and common property

• By-laws will also make it easier to keep pets (schemes can still decide against this)

• Reforms will allow strata schemes to take action against excessive noise and issue fines

Buyer's agent services

People engage buyer's agents for many reasons. At Melissa Maimann Buyer's Agent, I tailor the service to my individual client's needs.

• Developing a clear but comprehensive brief based on your requirements. The more detail, the better, as it informs the search and inspections and ensures that we pursue only those properties that are of most interest.

• Searching for properties through online databases, sales agents (off-market sales) as well as access to recent listings and networks.

• Inspecting properties on my clients' behalf, saving them time, frustration, cost and emotion. A short-list of inspected properties is presented to the client complete with an inspection report, photos and recommendations.

• I thoroughly research the surrounding area to discover any possible developments that may impact the capital growth of the property in the future, as well as such things as sales and rental data, comparable sales and neighbourhood data.

• I appraise properties of interest so that we can better understand the property’s value and pursue only those properties that are likely to be within my client's budget.

• We arrange building and pest / strata reports to further our due diligence.

• We bid at auction on behalf of our clients in the event that we are not purchasing prior.

Calculating the true cost of an investment property

Investment properties are generally a great investment to have, but there are a few things to be mindful of when calculating the true cost of holding your investment.  Some of the things to look out for are:

1. Levies, and in particular, whether there are any special levies planned related to planned works

2. The state of the building, to gauge whether remedial works will soon be needed

3. The cost of property management, if you are choosing to have your property looked after by a property manager

4. Repairs and maintenance to the property

5. Periods of rental vacancy

6. Cost of stamp duty, buyer's agent fees and other purchasing costs

7. Advertising your property and professional photography

8. Water and council rates

9. Mortgage interest

10. Landlord insurance, building insurance

How can a rental search service help me?

Rental search is not something that many would associate with a buyer's agent service, however it is one that I offer here at Melissa Maimann Buyer's Agent.

How does it work?

Essentially, the service assists tenants to find a great home to live in, without all the hassle of finding their property themselves.  The essentials of the service are:

Sitting down to work on a property brief: this gives me a good understanding of that my client is looking for in their ideal home.  We explore this so really flesh out what's important versus what is "nice to have".

Next, I set about finding a property.  This involves a lot more than merely browsing the internet.  It involves contacting the property managers in the areas of interest to explore other opportunities that have not yet reached the market, and also exploring options via buyer's agents who may have recently purchased investment properties for their clients.

The next step is to inspect the properties for my clients, saving them time and hassle.  No more turning up to inspections to find that the property has been leased; turning up to an open home to see loads of other keen people there and feeling hopeless about the situation; and no more endless inspections of properties that do not look anything like the photos on the internet.  I take all the worry and frustration from my clients by doing the inspections myself.

Once I've found a suitable property, I let my client know, and if they're in town, they come to inspect it as a private viewing.

Once the client has seen - and loves - the property, the next step is assistance to write a great application, and again, I assist with this too, to ensure that the application has a competitive edge to it.

We also review the lease terms to ensure that they are standard, and I negotiate the rent down where possible, saving clients hundreds - if not thousands - of dollars.

So it really is a great service, full of benefits for a time-poor family, busy professionals, people from out of the area, or simply people who value their time and prefer not to spend every Saturday (and week days) inspecting properties and dealing with real estate agents.  Get in touch today - I'd love to help!

Once you've signed an agency agreement with a buyer's agent, what can you expect?

The agency agreement is an important document that clients sign with their buyer's agent at the commencement of the buying process.

An agency agreement is generally a standard form from the Real Estate Institute, or individual buyer's agents may devise their own.  Fair Trading lists the types of inclusions that should be found in any buyer's agent agreement.  If the buyer's agent has devised their own agency agreement, you'll want to be sure that it only contains standard terms and conditions, and that you have the rights and protections that you are entitled to.

Sometimes people ask me why it is so important to have an agency agreement signed. Like any agreement, it protects the consumer of the service - so that they know what they can expect, how much the service will cost, and what avenues they may pursue if they are not happy - and it protects the provider of the service from accusations that they did not disclose certain matters; were not up-front about fees; or that they do not have the authority to act on behalf of their client.

All licensed agents are required to act in good faith and with reasonable care, and promote your best interests.  Confidentiality must be maintained throughout the process and beyond.

So, although it may seem burdensome, an agency agreement is actually a smart way for clients and agents to do business.  An agency agreement has many built-in clauses that protect the client, ensure that fees are adequately described, accurately sets out the services expected of the agent, the type, location and budget for the new home or investment, and sets out the term of the agreement.  With a signed agency agreement in place, the agent has the authority to search, inspect, negotiate and exchange properties on your behalf.

Buyer Beware: Not all Buyer's Agents are Exclusive Buyer's Agents

An exclusive buyer's agent represents only the buyer.  There are many agents: both selling agents and buyer's agents, who market their services as serving buyers.  What does this really mean?

A selling agent had a fiduciary duty to the seller.  They are bound, by law, to represent the best interests of the seller, and maximise the purchase price.  While the selling agent may assist a buyer with access to the properties on their database, that's about as far as the relationship may extend.

Likewise, there are some buyer's agents who are not exclusive (or independent) buyer's agents.  This means that the buyer's agent is retained by developers or selling agents to use their client databases to sell new developments and existing properties to.  In many cases, the buyer's agent is not paid by the buyer because they receive significant commissions from the selling agent or developer for selling the property/ies to their buyers.  Commissions can be very generous, negating the need for the (non-exclusive / non-independent) buyer's agent to be paid by the buyer.

Although some people believe that a buyer's agent is expensive, the buyer's agents who are paid by the buyer, with no other sources of remuneration, are the ones who are most likely yo be independent / exclusive buyer's agents, 100% representing the needs of the buyer.

How can I be sure that I'm working with a truly exclusive / independent buyer's agent?

• Does your buyer's agent work for or with a selling agent / selling agent's office?

• Does your agent work for or with a team that offers a range of services such as mortgage broking, conveyancing, financial planning?

• Does your buyer's agent only purchase new properties such as development sites, off-the-plan or brand new properties?

If so, the chances are that your buyer's agent is not exclusive / independent.

Melissa Maimann Buyer's Agent is an exclusive and independent buyer's agent.

Things that a buyer's agent will know, that the internet won't

Statistically, nine out of ten home-buyers use the internet during their home search process to research properties.  While websites such as www.domain.com.au and www.realestate.com.au are excellent sources of information, there are certain aspects regarding the buying and selling process that a real estate professional will know that can't be found online.

Appraising a property

Appraising property requires research into the current market value of a property.  While it is possible to get a general idea of the property prices in an area, setting a fair market price requires in-depth, working knowledge of the area and current market conditions. A real estate professional considers several factors when setting a maximum purchase price, such as market trends, suburb demand over time, neighbourhood development, and the latest buyer preferences, to name a few. Although there will be an average price per square metre in a certain area, each and every home is unique and will need to be priced accordingly based on its distinctive offering.  Factors such as aspect, views and proximity to the main road and transport will impact the price.

Offline marketing

Even though online marketing and social media have become a valuable part of the property marketing process, there are many properties that actually never reach the market: they are sold either off-market or pre-market.  Real estate selling agents and buyer's agents know one another well, and buyer's agents are generally the first to know about these pre-market and off-market properties, enabling their clients to be placed ahead of the competition.

Negotiation

Buyers agents are skilled, experienced negotiators, which is valuable when a buyer is trying to trying to reach a fair price for the property they're hoping to buy.  While a website will be able to provide an estimate of how much a home should cost, it won’t be able to evaluate whether that is indeed a good deal or not.  A skilled buyer's agent will be able to access, analyse and interpret a range of information to determine a fair purchase price - and negotiate this with the selling agent.

With fewer properties on the market, is there a need for buyers agents?

It was a great question I was asked recently.  I was speaking with a client who was lamenting that there were so few properties on the market at the moment.  She asked me if this has impacted the demand for buyers agent services, as many people like to do their own online searching, and given that there's not much out there, how can a buyer's agent possibly add value?  It was a great question, and I took some time to explain to her the amazing benefit of using a buyer's agent - especially when there's not a lot on the market.

You see, what's on the market - online via www.realestate.com.au and www.domain.com.au, is really only the tip of the iceberg.  In parts of Sydney, especially the eastern suburbs, many properties actually sell off-market.  Many agents encourage their vendors to try to sell off-market, before putting the property online, to potentially provide a faster sale process without the advertising costs associated with an online campaign.

A buyer's agent leverages off their relationships with real estate selling agents to the point that the buyer's agents are the first to know what is about to come to market - and what is going to remain off market.  It is during times of reduced stock on the market that a buyer's agent is actually essential, so that you as a buyer, have access to the full suite of online / off-market / pre-market opportunities.

5 Ways a Buyer's Agent Helps you Secure your Property

Many people ask me why they ought to use a buyer's agent when they can do it themselves.  It's a fair question, and each person needs to see the value for themselves before they can make that call.  Here are my thoughts on why it's a great idea to use a buyer's agent:

Access to more properties

A buyer's agent has access to off-market properties.  In the eastern suburbs of Sydney, around 30% properties are sold off market.  This means that the average person looking to buy a home or investment property would not even know about those properties.  There are many agents in the eastern suburbs: both buyer's agents and selling agents, and with this comes a strong incentive for sellers to sell their properties off-market, while buyer's agents are available to soak up that supply.

Skilled negotiator and advocate

A buyer's agent works with real estate agents all the time.  They know real estate agents and what makes them tick.  When it comes to negotiation, you have a skilled, dedicated person on your team, advocating for your needs.

Trusted recommendations to other necessary services

A buyer's agent will have a list of recommended services to refer you to: conveyancers, handymen, painters, electricians, sales agents, property stylists, removalists, mortgage brokers, financial planners, accountants and so on.

The purchase process is managed directly and swiftly when it is negotiated agent-agent

Sales agents love to deal with buyer's agents.  We speak the same language and are able to cut to the chase.  For both parties, this is a relief.  For the buyer's agent's client, it means more direct and honest communication.

Accurately appraise the property to ensure it is within your budget

How many people go after properties that ultimately sell for much more than the stated price?  Sound familiar?  A buyer's agent is able to appraise the property you're interested in,  to ensure that your precious time and resources are not spent on a property that will ultimately never be yours.

So there you have it: my top five ways a buyer's agent helps you to secure your property.

Finding the perfect rental property

Today, I want to focus on some of the challenges faced by people who are looking for a home to rent, and offer some solutions.

In winter, we typically see more properties coming on the market.  This can be excellent for tenants who are looking for a new rental property, however the increase in rental supply does not necessarily equate to market rent being offered and suitable properties being available.

Competition for rental properties remains strong, particularly in the eastern suburbs of Sydney.  It's fairly common for people to search for many weeks, never really finding a property that is close to suitable; or finding a property that is suitable, albeit with numerous applications on.  Oftentimes, finding the right home can feel like looking for a needle in a haystack: the good (and well-priced) homes get snapped up before you’ve even had a chance to see them, while the over-priced, less-than-suitable homes remain on the market for weeks.

How I can help

Working on behalf of tenants and representing their needs, I assist with presentation and preparation of your application to ensure that the landlord / property manager knows that you are a great tenant.  This puts you way ahead of your competition. 

Understanding the rental market well, I am able to accurately assess rental values so that you know when you're potentially going to be paying too much - and providing an avenue for the rent to be successfully negotiated down.  This in itself saves you hundreds, if not thousands of dollars.

I am also able to review the residential tenancy agreement to ensure that the terms are suitable for your needs.

Work with me

The first consultation is offered free of charge and without obligation to you. 

1. I take a detailed brief of your property need

2. I search for properties for you, both online and off-market, ensuring you're placed ahead of the competition

3. I assist with preparation of your application

4. I am able to inspect properties for you, delivering a short-list of properties that will be suitable for your needs. For every property that I inspect for you, I will provide a detailed and thorough report, along with photos: ones that accurately depict the home.

5. I negotiate the rent on your behalf.

The rental search service really saves time, frustration and money for tenants.  It saves time in terms of searches and inspections.  It saves frustration: turning up at rental properties to find they've just been leased; are not as they appeared in the photos; or are otherwise unsuitable.  Finally, it saves you money by successfully negotiating the rent down when excessive rents have been advertised.

Choosing an investment property

What are some of the things I look out for when recommending an investment property to a client?

What makes some homes "investment grade", while others are not considered in this way? 

Here are some criteria that I use:

1. Preferably a home that has parking. Parking is not essential, because there will always be tenants without a car who prefer to live where they want to live but without the extra expense for parking. If the property does not have parking, there should be easy street parking, and it should have a bus stop within a couple of minutes' walk, or a train station within 10 a minute walk.

2. Preferably not on a main road. Properties on a main road tend to be cheaper, both to purchase and to rent. As above, there'll always be tenants who prefer to pay a but less rent to live where they want to live. A main road is not a deal-breaker, but those properties that are off the main road may be slightly more popular over time.

3. A dwelling type that is typical for the area: if units are the predominant property in the area, buy a unit.

4. An area with a very low rental vacancy rate: I prefer a 2% rental vacancy rate.

5. An area with a proven track record for growth in property prices

6. An area within 20km of the CBD

7. An area with good transport

8. An area close to cafes, shops, schools, entertainment and medical facilities: these are the things that will ensure your investment property continues to be in demand.

9. An area with established properties

10. If a unit, levies that are not too high

So there you have it: my top tips for buying an investment property.  If you need a hand, I am only too happy to help. 

Self-managing your Investment Property

Self-managing your investment property can be a great idea, but there are some things you'll need to do - and do well - to succeed.  Here's a few considerations.

Selecting the right tenant for your property

The best way to select the right tenant is to interview the prospective tenant.  This can be done informally during open home inspections.  It's a good idea to consider ahead of time who you think the best tenant would be for your property, given the property's characteristics, for example if it has a garden, it may be suitable for people with pets; if it is on the top floor without a lift, it might be best for people who do not have any mobility limitations; if it has 2 bedrooms, i is best for no more than four people and so on. 

Tenants need to complete a tenancy application after they inspect the property.  It is up to you to check references, ensure your prospective tenant is not listed on a tenancy database, check ID and so on.

Insurance

Landlord insurance is a must when you're self-managing.  Tenants can abscond; damage can occur (accidental, malicious, deliberate); there may be legal expenses; there can be rental arrears.  Landlord insurance covers all of these situations.  In addition, you may need building insurance for a house.

How high to set the rent

The best way to set the rent is to have a good look at what other comparable properties are out there.  A comparable property is one that is within 1km of your property, on the market at the same time as yours, and is as similar as possible to yours.  Then set your rent 5% below the other properties that are the most similar to yours.  If your property has not rented within 2 weeks in a low rental vacancy area, you may consider dropping the rent by between $10 and $50 per week, depending on the starting rent.

Documents

There are many documents involved in property leasing:

1. Tenancy application

2. Residential Tenancy Agreement (lease)

3. Condition Report

4. Bond Lodgment Form (this may be done electronically)

Success

The path to successful self-management lies with selecting the right tenant, completing the appropriate documents (for your protection and the tenant's protection), being extra careful with Landlord insurance and ensuring along the way that the rent is always paid on time - and following-up promptly if it is not - and then regular property inspections to ensure that your investment is being cared for.

Client Story

Jo (not her real name) was in a real pickle.  She lived with her elderly parents in a home that was no longer suitable for them due to recent surgery.  Working full-time, it was hard for Jo to get out to view properties during the week.  Saturdays were spent at open homes that were full of other buyers, with properties close to exchange almost as soon as they went on the market.  After almost a year of looking without success, Jo became desperate.  Her parents' health was declining: recent falls, more surgery planned - and they really did need to move now.

With very specific property requirements and a fairly tight budget, Jo knew it would be tricky.  The market had moved since she started looking, however her budget had not.

Jo came to me in tears.  We talked a lot and worked through some options and possibilities for the new home that she would share with her parents. 

Within three months, I had presented several properties to Jo that were close to her needs.  Those properties were sourced, inspected, reported on, we even did due diligence on a few and negotiated with agents - alas, none was perfect.  We kept looking.  I am always keen for my clients to purchase the best home for their needs, rather than settling for something that may need to be sold again soon - as buying and selling property is expensive.

We reviewed the property brief and talked through some other options, and we refined the property brief as needs changed.

My search consisted of on-market, off-market and pre-market opportunities.  What does this mean?  On-market is the sorts of properties you see advertised on www.realestate.com.au and www.domain.com .au.  Pre-market are those properties that are going to appear on the internet soon - but are not there yet.  This situation presents a unique opportunity for a buyer's agent to purchase a property before it even reaches the market.  And finally, there are off-market properties.  These are properties that are never planned to be placed on www.realestate.com.au and www.domain.com .au.  They are properties where the vendor prefers to sell off-market - perhaps to maintain privacy, perhaps to save on advertising and property styling, or perhaps - more likely - because the selling agent has a long list of buyer's agents who they can contact - and sell the property quickly without ever needing to go to market.

This was the situation for the property that I purchased for Jo.  The perfect property was actually sourced off-market.  I had maintained very close contact with local real estate agents - they all knew Jo's requirements - and as soon as the right property came up, I was the first to know about it.  One quick call and I inspected the property and advised Jo of it potentially being " the one" - and it was.

The process for Jo was smooth and efficient.  She regained her Saturdays, and did not need to feel guilt for being unable to view properties during the week due to work commitments.  We shortened her search time and located the perfect property through a channel that was not open to Jo. 

Following some minor renovations (painting and new carpet), they moved in and are very happy.

If you know someone looking to buy a home, investment, or commercial property in Sydney, I'd love to assist.  And until June 30, 2016, I am offering 50% off buyer's agent services.