In the first installment of this two-part series on investing in cheap property for long-term returns we explore fundamental guidelines that will assist you in choosing the right property.
There are a few fundamentals that need to be kept in mind when buying affordable homes in developing areas and these guidelines will undoubtedly assist you in making the right choice.
Research the market
As with any investment, whether short- or long-term, educating yourself on the market is imperative. The digital age has undoubtedly eased this exercise, so browse property websites like Private Property to gain a deeper understanding from industry insiders and gain a measure for property prices.
You don’t need a degree in economics to make a good decision on where to buy a home, all you need is information.
Identify an area
Usually you have an idea on where you would like to buy your property.
However, during your research, open your mind to new developing areas with cheaper homes. This area of property investment is often overlooked and therefore undiscovered gems are generally on offer.
Once you have investigated certain areas and selected a few that show promise, then the real fun starts. Firstly, take a look at what houses are going for in these areas.
If the areas are close to you definitely take a drive to them and stroll through the streets investigating the suburb. Pop in to a few show days too, to get a feeling for the areas.
Select two to three areas and remain open about possibilities in all. Being dead-set on one specific suburb can blind you to better opportunities.
Determine a realistic budget
You make your money when you buy and not when you sell. Paying good value for your home increases margins. Remember this counts for cheap property also – maybe even more so. There is nothing worse than overspending on property and then not being able to recoup the money spent, to not even speak of a profit.
Seek expert assistance
Once you have made a final decision on budget and areas, don’t walk this road alone. As you sought advice from industry experts in your research, rely on expert advice from real estate agents in your identified areas.
On your days when you scout suburbs, take down numbers of the different estate agencies and try to identify the most trusted property agent. Become a bit of a stalker and take a look at their website and research them to see what clients say about their service. Private Property’s portal also has this information.
Then set up a meeting with these agents and discuss with them what it is you need. An insider’s trusted guidance will direct you in the right direction and help you avoid making the mistakes many amateur buyers make.
This is where your research and real estate agent come in handy. By understanding the areas where you hope to buy you will know whether or not the rental income you seek against the bond payments will be profitable.
Together with your estate agent, calculate all the costs. Your agent will be able to shed light on hidden costs and assist you to make more accurate assessments. There is also information on conveyancing and other property transfer costs here.