Buying an investment property can take a lot of your time and requires a great deal of effort, such that once you’ve made it past the negotiation and the actual purchase, you would want to sit back and marvel at the outcome of your efforts!
We hate to spoil the party but now’s not the time to rest—just yet—this part of the investing process requires your full attention and is time-sensitive!
We’ve been sharing updates on our Mackay purchase case study for Serg and as of our last post, we were thrilled to announce that we’ve made an offer and the offer was accepted.
Now the road leading to the actual purchase involved research, analysis, more research and inspections. And we’ve documented everything in the hopes that you may pick up some tips from our case study. If you missed the past posts, we suggest you read them here before you proceed reading about the crucial part in the investing process:
- Case Study: Mackay, QLD
- Investing in Mackay: Three Suburbs to Look Into
- Mackay Purchase Case Study: A Quick Look
- Mackay Purchase Case Study: Buying
After the Purchase
The things that need to be done after the purchase are as important (and crucial!) as the things you do before buying the property, namely, the research, analysis and negotiation process. What are these things? Below we enumerate the tasks that we need to coordinate before and after the contract signing and settlement.
We can not emphasise enough how important it is to review the contract prior to signing it. This is where you will be needing another professional on your team—a property solicitor or conveyancer to review, discuss, and if needed, amend some items in the contract.
A tip when you’re buying in another state: tap the services of a property solicitor or conveyancer who has had prior experience buying from that state. You would want someone who knows his/her way around as things can be different between states.
Building and Pest Inspection
Once the contract had been signed, it is important to know whether the property has some issues and whether those issues are relevant enough to be considered as ‘show-stoppers’. Again, it is recommended to have the building and pest inspection done by a local team as they have the knowledge of the area and are familiar with the common issues affecting the area.
In our case, we tapped into the services of a building inspection company in Mackay who found some minor issues in the property. While we deemed those issues as non show-stoppers, we did present those issues to the vendor, considering the property was brand new and those issues should have been identified and corrected by the builder.
It is expected that you have had this one covered before the purchase as this can cause a holdup when not immediately completed. That means processing paperwork to and fro you, your broker and the bank. Needless to say, it is important to accomplish the things that are needed from your end.
Be sure to have everything in place—a pre-approval is helpful, though not guaranteed, but you can expect that having one will ease up your application. Now the usual time frame in a contract is 14 days but in our case, we asked for 21 days and were able to manage without any holdup.
This is another important process that any property investor should be wary of (and should have covered) as soon as the property goes unconditional. Going unconditional means you, as the buyer, has the right and obligation to pay for and settle on the property per the terms of the contract. Getting a policy quote even before you purchase would be a good idea so you would already have reviewed and obtained one once the property goes unconditional—no one knows what can crop up between the property going unconditional and the settlement period!
Our Mackay purchase case study is a perfect example of this scenario. A tropical cyclone warning was issued on the area where Serg’s property is located and so insurance companies were not issuing new policies during the time. We were able to help Serg secure a policy over this period but not everyone could be as lucky!
Once the insurance is done, next task is to find a reliable company to manage the property. The interview process can help you assess what each property manager offers and the fees associated with the services.
In our case, after interviewing at least 5 candidates, we chose a property management company who then immediately put up the property on the Internet a day after the appointment.
Your property manager is the one in charge of finding a tenant but it would help to work closely with them to ensure quick results. Whilst you would naturally want to get the ‘bang for your buck’, it is also important to know the local market in order to have the going-rate for such property.
Now this one shouldn’t be left out prior to settlement. Have a quantity surveyor prepare a report of depreciation schedule, especially for a brand new property, as in the case of Serg.
These are the important things that need immediate attention soon as you’ve purchased the property. Our case study is nearing its completion. Be sure to stay tuned as you’ll still get bits and pieces of tips that you can apply in your own journey in property investing. See you then!