Thursday, July 9, 2009

More tips to buying your first home

* Spend time researching all aspects of property market before even looking for an investment property. Issues, such as negative or positive gearing, rental returns and depreciation are key matters that have to be considered by a first time property investor.

* Past trends in property values generally are an indication of future trends and therefore it is wise to examine the long-term capital growth rates of the suburb. REIWA can provide property values trends for most Perth suburbs for the last 10 years at least.

* Take a broad approach to buying an investment property. Most first time property investors buy a property in their local neighbourhood because they are familiar with the area. By taking a narrow approach to the location of the investment property, first time investors therefore severely limit their options.

* Try to target suburbs in lower priced areas which have a higher number of properties for sale. A simple tip is to check the weekend papers and identifying areas which a larger number of newspaper advertisements.

* When you have selected a suburb, don’t make an emotional decision when choosing a specific home. Most first time investors purchase a property they would like to live in. It is important to remember that the investment property must appeal to a tenant who will be paying the rent.

* Check out any planning changes proposed for the suburb. Many local governments are undertaking reviews of zoning which could have a major impact on property values. For example, a property that was purchased for a single residential use and then rezoned by the local council, as a triplex site will increase substantially in value. The planning department of a local government can advise first time investors of any proposed zoning changes.

* Check out any planned infrastructure changes for an area you are interested in buying. For example, an upgrade of a local shopping centre or sitting of a new railway station can have a major impact on local property values. This trend occurred in Rockingham following the extension of the southern freeway.

* Make sure that there are tenants prepared to rent your property. Rental income is a key factor in serving the loan so if you cannot find a tenant then you will have problems keeping the investment property over the longer term.

* Check your finances before you consider buying an investment property. If you have pre-approval finance it will allow you to move more quickly to secure the right investment property.

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