Planning your first property purchase is a big deal, in fact you will probably find that the hardest deal you will ever do in property is your first deal. This is because you don’t know a lot about buying and selling property. Once you get past that first deal you will find future property purchases easier and less stressful.
To make your first property purchase a little bit easier I have compiled 5 tips to help you plan your first property purchase. So when that perfect property comes along you know exactly what it looks like and you can make make the first purchase as easy as possible.
1. Set A Deposit Goal and Timeline
Look at your budget and look at what you are going to be able to afford. Here are some things you really need to consider
– What size loan can you afford the mortgage repayments on
– How much will a bank actually lend you
Once you know your goal property price you can work out what you will need as a deposit. You might go for a 20% deposit, but recently more and more investors have been opting for 5-10% deposits so they can get into the market earlier.
Set your timeline. “I want to save $xx,xxx by 31st July in year X”. A time line will force you to work out exactly what you need to do to achieve that goal in the timeframe you set. Then get to work saving your deposit.
2. Plan Exactly What You Want In A Property
It is all well and good to have your budget set and your deposit saved, but if you don’t know exactly what type of property you are after then it will be like trying to find your way in the dark.
Get nitty and gritty. Do you want a unit or a house. How many bedrooms does it need to have? Does it need a garage? What kind of light does it need to receive? What area does it need to be in? One story or 2 stories?
Then you need to know why you want what you want.
Eg. “I want a garage so I have the option of turning it into an extra room” or “I want a house so I don’t have to pay strata fees and I have more control over renovations and improvements”.
If you know why you want what you want you will be less likely swayed towards lesser investments.
3. Choose The Area You Want To Invest In
Once you know what kind of property you want get serious about the area you want to live in (or invest in). You may narrow this down to an area of a few blocks or the area could be as big as a few suburbs.
Then start looking for your ideal property in the exact area you want to purchase. This way you aren’t wasting time getting distracted from other properties.
4. Look and Make Offers Even If You Aren’t Ready To Buy
Go to the open houses of the properties you are interested in buying. The goal here is to build your confidence in two major areas
1. Dealing with real estate agents (and giving them your details)
2. Making offers on properties
You want this process to be easy when you actually find the perfect property so get started early. Make offers, if they get accept say that you have found another property that suits your needs better. Don’t be rude and make a lot of useless work for one real estate agent, but get your face out there and make offers.
Make offers over the Internet if you are too scared to do it face to face (this is what I did first time round).
This serves the extra purpose of letting the agents know exactly what you are looking for, so if your exact property comes onto the market they will let you know first off the bat and you will have first opportunity to make an offer.
5. Have Extremely Clear Financial Goals
Be 100% clear on your financial goals. What exactly do you want to achieve by investing in property?
If you want capital gains then how much do you want and how quickly do you want it?
If it is rental income then how much rental income exactly are you after and when do you want to achieve it by.
Knowing your exact financial goals let’s you look objectively at properties and allows you to reassess exactly what you want in a property.
Got any more tips for first time buyers planning their first property purchase? Tweet it using @ryanmclean