Buying your first Investment Property!

Ivana I can give you some answers though most questions have more than one answer (life’s like that). I have bumbled my way thru a couple of purchases and I’m sure some of the more experience investors on this forum will add to what ever I write.

Q When do you go for a pre-approved loan?
A Before you even start looking at properties. See a mortgage broker (or 2). Be completely open and honest about your finances. If you conceal anything it will just put more risk on you. Before you do even this tho’ a financial adviser or accountant would be a good investment. Unless you are pretty good with your finances and know exactly how you stand financially right now, how much equity do you have, how much do you spend compared to what you earn, how much risk you are happy to take, and your current savings, loans, insurances, super are well structured.

Q Do you hire a solicitor or Conveyancer and what do they do exactly?
A Depends what state you are in. A solicitor can handle all the paper work, paying of fee’s and transfering of monies once you have put an offer on a house. You can also get them to look over the offer document before you sign. In some states you can use a “settlement agent”. I don’t know much about conveyancers – I have only used them to value a building and its fixtures/fittings for tax purposes.

Q Do you hand over a deposit cheque to the vendor before or after your loan is approved?
A Pre-approval is the best but if you don’t have that and you want to sign a offer document then ensure it has the clause “subject to finance approval” on it and take it to a solicitor/settlement agent before signing.

Q Can you pay stamp duty on the day you settle?
A Yes. This is one of the things the solicitor/settlement agent should handle for you.

Q Can you pay for legal fees on the day of settlement?
A Same as above.

Q Do you have someone survey the property before you actually buy it, or just after you sign the deposit cheque?
A Depends on what you mean by survey. If you are talking a building inspection report for faults or structural problems, once again make sure you have a clause “subject to satisfactory building inspection report” on the offer document before signing and handing over money. If you talking about having the building surveyed for tax purposes I do this after the settlement. BUT be aware of issues related to the depreciation rate allowable on some older buildings. Its a subject on it’s own and if you do a search of the forum I’m sure you will find some info on it.

Q Can someone out there be kind enough to list s simple step by step process of the whole transaction of buying a house. From making an offer to leasing it out!!!!!?
A That will take me some time as I said I’m not that experienced and I fear I will miss a step or two. I will wait to see if someone with more experience can help us both with that one.

My advice is to take it slow. There’s no rush. There will always be another property down the track so if you miss out on one because you take your time over getting everything right don’t worry. After you have done a few you will get faster and faster at it – so I’m told. Til then softly softly…

Regards,
Karan.

Hi Ivana, I had the same questions before I first bought IP, and (after some mistakes!) found the simplest and most informative info in the Margaret Lomas books – particularly “How To Create an Income For Life”.
She is also a great speaker; if you ever get the chance go and see her. As a qualified Financial Planner, she has a way of putting things into perspective really well.
I found that the more you can read from various others that have done it, the easier it seems. I just wish I discovered this forum earlier!

Cheers

Realtor

Hello Ivana
Earlier this year I was in your situation- I had no clue what to do first.
Apart from the great advice given to you by Namaste, Blowie and Realtor, I would like to add that you’ll make life easier for yourself if you have all your paperwork organised before you apply for a loan.

THen, when you have to fill in the loan application, it will really speed things up. Once you got your loanapplication you need to do things fast. I really got stressed out and running around for days like a madwoman, getting all the stuff together and copied because there is no time to lose.

First, gather your 100 proof of identification points together. For example, for my 100 points I used my birth certificate (worth 70 points), land rates (worth 25 points) and Driver’s licence (worth 40 points). We also needed our visa’s as we are not Australians. Make copies.

For the loan application I needed heaps cause we have our own business and I needed to copy the last two years of tax returns from company, and also our individual tax returns. If you don’t have your own business I think you need pay slips. Last 6 months of savingshistory (copy all your bankstatements), liability verification (e.g. credit card statements). Proof of existing mortgage if you have one: last 6 months of existing mortgage statements.
IOW Make copies of everything under the sun[:0)]
The loan application was very long, 10 or 11 or so pages if I recall correctly.
FInding a good broker is also important. I used Mortgage Hunter and he was really supportive and helped me filling in the application, as I ‘didn’t get’ what to fill in on some pages.

We went to a solicitor and they were so great, they can arrange everything for you, pest inspections, building inspections, going through the loanoffer and loancontract with you. They work out all your payments like stampduty closingcosts you don’t have to worry about a thing. It was worth every cent adn I’d use them again. Conveyancers are cheaper but cannot represent you in court if anything happens, wherease a solicitor can. I think for newbies like you and me, using a solicitor gives peace of mind.
Good luck[]