10 Steps to take when buying Investment Property: Part 1 Building your team
So you find yourself in a position to consider buying a property as an investment, Congratulations! Considered and researched property investment is an excellent way to both create and grow wealth. But how do you know what actually is the right property to invest in in the first place?
Step 1: Have a goal and make a plan
Many people who consider property investing do not have a plan (or at least one that is well thought out!). They know that it is a worthwhile endeavour, and may have friends or family that rave about the property they invested in. Naturally, they may think to themselves "perhaps I could do that", but do not have clear financial goals to adhere to and guide them in their search.
It is vital to ensure you are clear as to the reasons for buying. Is this a short or long-term investment? Are you buying the property primarily for cash flow or for capital appreciation? Knowing these details can save you a lot of time, money and heartache in the long term.
Step 2: Create an A-Team
At Pest Build Legals, we always advocate for getting your best team together to ensure that your property purchase does not become a nightmare, and of course this is true for investment properties too.
Step 3: Consider hiring an Investors Real Estate Buyers Agent
Unless you are a seasoned investor and very across the property market and trends in the area in which you are looking to buy, then a buying agent is a great bet. A buyer’s agent is a property specialist that works for you to find, view and arrange the purchasing of your home. A buyer’s agent will take into account your circumstances and requirements, including your budget and what you are looking for, and then find those suitable properties for you. Buyer’s agents will approach a property without emotion and can give an accurate appraisal of the property's value. This prevents overcapitalisation - which simply means that you avoid paying too much for the property.
Step 4: Find a local builder
A licensed local builder is a vital ally and will give you an unbiased and unemotional inspection and valuation of your home. As well as ensuring that there are no major defects on the property, builders also have a grassroots level knowledge of the property market of the local area. If you are committed to a property investing in that area, a good relationship with your builder can be invaluable.
Step 4: Hire a Real-estate Conveyancer or Solicitor
These essential property professionals specialise in the legal process of transferring ownership of the title of the property and/or land to the new owner. If you are looking at buying multiple properties and/or complex title arrangements, then a solicitor will be your best option.
Step 5: Speak to your Tax Accountant:
Despite what many believe, buying a property is more than just creating passive income. Property is a part of your portfolio of investments and should be treated as a side business. This is where an experienced accountant is a vital part of your team. You see, there is no 'one right way' to approach property investing as it depends hugely on your personal circumstances. An accountant can help you navigate tax considerations such as negative gearing and ensure that you minimise the tax you pay on your total earnings. Whether you buy the property in your own name, a company name or through a self-managed Super Fund - the key is to create a tax-efficient investment that results in the overall taxation position of your property investment is maximised.
Now you have created your own investment team to support you. Go to Part 2 Find And Buy Your Property
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