Property is a dynamic asset class with many working parts, and it extends far beyond the ‘house in the suburbs’ most of us are familiar with.
It pays to understand the fundamentals of property investment so you can be prepared for the journey ahead, remembering property is typically a long term commitment to wealth creation.
1. Are you ready?
The first step in your journey is to consult with a professional services provider to see whether you are ready to invest and, if you aren’t, what steps need to be taken to reach the purchasing stage.
It is important to understand that your personal circumstances are different from those around you, so be sure not to take guidance from those who are not specialists in that particular field. You wouldn’t have a dental exam at a backyard barbeque, nor would you seek investment advice there.
2. Selection
Once you’re financially ready to ‘take the plunge’, you should work with a professional property specialist who knows the market and knows where the best opportunities are located. The best opportunity for growth and acceptable income levels may not be in your own city.
A good property specialist would usually negotiate inclusions not available to ordinary investors. This is due to the ‘economies of scale’ of the specialist representing multiple purchasers rather than a sole entity.
3. Expression of Interest
Once your property has been selected, we will place it on ‘hold’ for you, which temporarily prohibits the property from being sold to somebody else. This hold usually lasts for 48 hours, allowing enough time to complete an expression of interest form and submit a refundable deposit.
The expression of interest is forwarded to the vendor, who will then begin to initiate the sales process. It is now that you will need to complete anything required before the exchange of contracts, including consulting with a legal practitioner.
4. Contract Exchange
Once the contract of sale is agreeable between all parties the contracts can be exchanged, which binds the purchaser and vendor to the conditions set out in the contract. It is at this stage you have legally committed to purchasing the property from the vendor.
The contract of sale is the most important document as it stipulates what you have agreed to pay for. At contract exchange you are also required to submit your non-refundable deposit, which is typically 10 per cent of the purchase price.
5. Settlement
Settlement is when ownership of the property transfers from the vendor to the purchaser. As settlement approaches, there are multiple things to consider including:
- Obtaining finance to pay the remaining amount due to the vendor
- Any additional payments (including stamp duty)
- Property management and tenant selection
- Any additions required for the property
Given property investment is the largest purchase most will make in their lifetimes; some investors will feel anxious at particular stages. Working with professionals at every stage of the selection and buying process is important.
Luke Graham
Property Investment Manager
Omniwealth Property
t: 02 9112 4300
m: 0429 472 427
luke.graham@omniwealth.com.au