Buying an investment property is a big step and doing thorough due diligence before signing the contract is essential.
There are many factors to consider, from the big issues like price and yields to the smaller details like garage remotes and it can be very helpful to work out a checklist of questions to ask beforehand so that you have peace-of-mind that when you make your final decision, it's the right one.
The investigative process can be broadly divided into two main focus areas, namely issues surrounding the property from an investment perspective and then the more practical issues relating to leasing opportunities and the property's 'tenant-readiness'.
This article provides some key questions that you should ask about the property itself whilst the more practical, tenant-orientated questions will be covered in a second, follow-up blog post.
The following questions will help you focus your real estate strategy on the right areas and make sure you end up with an investment that you're happy with.
- What have similar properties in the area sold for - and are there many properties like this one currently on the market?
- Why is this property on the market?
- How many owners has the property had? (Multiple owners could mean that the house hasn't been maintained optimally).
- What is the vacancy rate of the area?
- What's the suburb's rental yield history and resale history?
- What is the property's rental potential?
- What is the current zoning for the property and is it likely to change in the future (such as subdivision and densification)?
- What are the area's demographics and is this property likely to fulfil the population's needs?
- What are the current facilities and services in the area (such as transport, schools, retail and entertainment options, medical providers, sporting and community resources etc)?
- Are there any major projects and infrastructural developments planned for the future?
- What condition is the property in and will additional spend be required to make it more attractive to tenants?
- Does the property have any covenants, caveats or restrictions?
- Do all the improvements or alterations that have previously been done to the property comply with building and council regulations?
- If the property is currently being leased, what are the terms and conditions of the contract?
- Are there comprehensive maintenance records for the property?
- Are there current property management arrangements in place?
This list of questions is by no means exhaustive and simply provides some guidelines to help you arrive at an informed conclusion. It's always recommended to seek professional advice from a real estate company that has an established reputation in the area you are looking to buy in as they will be able to answer all your property-related questions from a position of experience.
Speak to us today as we pride ourselves on our personalised service in property management in Perth and have been delivering exceptional service in real estate to the people of West Australia for over 60 years. Call tus on 08 9362 5333 for friendly and professional answers to any real estate or property management questions - and in the meantime, look out for part two of this post containing more essential information on buying an investment property coming up soon.