| 82 Practical Questions to Ask Before Buying an Investment Property
(As this is a long list – A video is not appropriate. A text based post to use)
Purchasing an investment property is exciting, complex and can be stressful. After all you are putting a lot of money on the line. So you need to be as sure as you possibly can be that you are making the right decisions.
This takes lots of research and asking the right questions.
Having a good Buyers Agent on your side can help you immensely. But you still need to do your own research and educate yourself. Your buyers agent will be a great help to save you time, stress and money. But at the end of the day the buck stops with you. You are the one committing hundreds of thousands of dollars.
Buying property is never perfect. Many mistakes and losses in real estate can be blamed on poor research and decisions made on poor research.
To help you understand some of the practical questions to ask, below is a checklist (in no particular order – except for the first few questions).
- Why are you wanting to buy an investment property?
- What are your financial goals?
- What is your complete budget?
- Can you afford the extra expenses associated with a rental property?
- How long do you want to keep the property for?
- What is your capital growth strategy?
- What is your cash flow strategy?
- Are you looking for a positive geared property? Or
- Can you utilise the benefits of negative gearing?
- How many years left of depreciation does the property have?
- Which area is right for you?
- How much are similar homes selling for in the area?
- How much did the seller pay for the home?
- Why are they selling?
- How long has it been on the market?
- What kind of sale is it?
- What are the local schools?
- Are there any schools planned for the local area?
- What’s the nearest hospital?
- Where are the local shops & restaurants?
- How is the neighborhood?
- What type of person would rent the home?
- What is public transport like – and how far away is it?
- Are there any major projects happening in the area?
- What is the availability of new land in the area?
- Is the property in a known flood zone?
- What is the zoning of the property?
- Is there potential for this zoning to change in the future?
- How does the council view future development?
- What are the property taxes?
- Is the neighborhood anticipating a change?
- What is the suburb median rental yield?
- What is the property’s rental yield?
- How many renters (%) in the area?
- What is the vacancy rate in the area?
- What is the suburb’s median house price?
- What are the local auction clearance rates?
- How long has the property been on the market for?
- What is the average “days on the market” (DOM) in the area?
- Is the property in a known flood zone?
- What if any property discounting is happening in the area?
- What is the population growth forecast in the area?
- What are the local demographics?
- For this type of property, what is the current market rent?
- How old is the property?
- What is the average age of properties in the area?
- How many bedrooms / bathrooms are there? (what is the average in the area)?
- How many car parks are there?
- Can you safely park on the street?
- What are the rules on pets?
- What are the monthly maintenance fees?
- Are there body corporate fees? How much?
- Is a recent strata report on the property?
- Would tenants pay more for the property to have air conditioning?
- What improvements would tenants pay more rent for?
- How old are any major renovations?
- Is there documentation on work done to the house?
- Is there anything that’s NOT included in the sale of the house?
- Does the property need work? If so what work?
- Is there lead, or asbestos?
- Are there wiring or plumbing issues?
- Were there any additions or major renovations?
- Is there documentation and permits for any renovations?
- Are there any covenants, caveats or any regulatory issues?
- Does the property & home match what is on the Certificate of Title?
- Is there a development application (DA) for the property?
- How old is the roof?
- How old are the appliances and major systems?
- What’s the history of past insurance claims?
- Has the vendor got a building and/or pest report?
- Exactly what is included in the sale?
- What fixtures and fittings are part of the sale?
- Has the owner purchased elsewhere?
- How desperate does the owner need to sell?
- How many owners has the property had?
- What price do you think the owners would accept?
- Have they had any offers so far?
- Has the property been valued by a registered valuer?
- Is the property currently under lease?
- Has anyone attempted to purchase the property and failed due to finance?
- How much will I pay in closing costs?
- Will the vendor pay or contribute to closing costs?
Asking lots of questions and lots research are the keys to minimising the mistakes you may make.
Just remember that the agent is acting in the interests of the seller and not you the buyer. You are definitely best to utilise the services of a good Buyers Agent who will solely act in your interests not the seller.
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NOTE: This is not meant to be financial or professional advice and is only of general nature. You must seek professional advice before taking any actions. Any actions you may or may not take are your responsibility.
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