The 11 Best Tips For Buying Your First Investment Property
August 31, 2018
The 11 Best Tips For Buying Yo...
You’ve decided to go ahead and try and purchase your first
, firstly let
me just say a massive congratulations to you, purchasing property can be a great step towards
securing your financial future and creating financial freedom for yourself and your family,
today I’m going to talk about the eleven tips that I have for buying your first investment
Hi, I’m Ryan Mclean and I’m from positivecashflowaustralia.co.au where we help people like yourself find and
invest in positive cash flow properties, go ahead and check us out and we’ve got a free
eBook showing you the 12 places where you can find positive cash flow properties in
You can get that by going to positivecashflowaustralia.com.au forwards slash free, the short link is pca.im
forward slash free.
What are my 11 tips for buying your first investment property?
Tip number one is to look at 100 properties, that’s right, what most investors will do
is they will go out maybe look at two maybe three properties in their local area and then
they’ll purchase one, they’re probably going to pay more than what is actually worth, by
looking at multiple investment properties in multiple areas you can get a better understanding
of each area, better understanding of what properties actually worth and you can ensure
that you buy a property that is going to move you towards your financial goals not something
that you’re going to pay too much money for.
Many famous and successful investors use the 100, 10, three one rule what that means is
that they look at 100 properties and of those 100 they might make offers on just 10 of those
Of those 10 they might have three offers accepted and of those three offers accepted they might
actually go ahead and purchase one property, they are looking at 100 properties just to
100 sounds like a lot of properties but with the internet is actually much easier to look
at 100 properties to analyze 100 than it used to be in the past, to make sure you’re looking
at a lot of properties before you go ahead and buy.
Tip number two is to research the area, just because you live in an area doesn’t mean you
know what the property market is like and doesn’t mean you know how that going to perform
in the future, if you are buying out of the area then obviously it’s going to be very
important to do your research as well.
Research is so important because it’s important to understand how the area is going to perform
both in rental returns and in capital growth you know that you are buying a solid investment
that I going to deliver on your financial goals.
I recommend a tool called ripe house which you can get by going to pca.im forward slash
ripe and that would direct you to ripe house, you can check that tool they’ve a free trial
that allows you to look in an area, look at where the hotspots are, look at where the
blue cheap properties are, look at where the government housing is and they’ve a bunch
of great features out of there.
I do suggest that you use ripe house when doing your research, I also suggest that you
do more research by looking at the purchase price of properties gone, comparing other
previously sold properties in the area and just going to more detail in the area before
you go ahead and buy.
If you want more details on how to research an area because that’s beyond the scope of
this video then I have a full module dedicated to it in at positivecashflowacademy.com.au
you can check that out and become an expert in researching.
Tip number three is to don’t always believe the real estate agents, just because a real
estate agent says there’s another offer on the table doesn’t necessarily mean that there’s
another offer on the table.
Just because the real estate agent says that this is a great investment property doesn’t
mean that is going to be a great investment property.
Always do your own research and where possible get outside opinions on the property, if the
real estate manager whose selling the property advices you that this property is going to
rent for 360 per week, well maybe it’s a good idea to go to another real estate manager
and say I’m looking just considering purchasing this investment property and I may want to
rent it out through you guys, would you be able to give me an evaluation of the rental
income for this property.
In that way you are getting a party you evaluate it whose not involved in the selling of the
property and it’s not going to get a commission on the sale of that property.
Don’t always believe what the real estate agent say they are very helpful but sometimes
all sales reps can stretch the truth just a little bit.
Tip number four is convincers versus solicitors which one would you use, I suggest you look
into both depending on the property if it’s a more complex transaction if there’s more
you need to look into that you need to do then the solicitor might be a better option
for you, if it’s a very simple transaction then nothing is going to go wrong then the
convincer is going to be cheaper than the solicitor then maybe able to do the same job.
When I talk to convincers and I say well what’s the difference between you and the solicitor
then they basically say to me if things get complicated and things get messy then we are
restricted at what we can do whereas the solicitor can do everything, but they also say that
if it does get complicated if it does get messy we can just hand you over to a solicitor
and then they can deal with it from there.
Look at the difference between convincers and solicitors because you can save yourself
a couple of grand going with the convincer instead of the solicitor.
Tip number five is to get a building and pest inspection done, still amazes me how many
new investors go out purchase a property and be without any building or pest inspection
only to find out that is termite ridden or its got issues with the foundation and or
something that is really expensive and structural to fix.
Paying for a building inspection or pest inspection which I’ve created a video about the cost
of those but you are looking around probably three to five hundred dollars apiece if you
get that done then you can be assured that the property is up to you to your standard
and doesn’t have any major issues that are going to cost you an arm and a leg down the
Tip number six is not to get emotional, what happens when we go out and purchase our first
investment property most of the time we are going to get emotional, I love this property
I love the way it looks, I love the feel, I love the wallpaper or the carpet or the
straight that it seems or the tree that’s in the backyard and by getting emotional this
leads to go ahead and pay more for the property than we should have.
If we are not thinking in financial terms we’re just thinking in emotional terms then
we will often make poor financial decisions because we haven’t assessed it financially,
our emotions are driving us to make that decision, when it’s your home obviously there are some
emotion that’s going to be involved there, when you are buying your first investment
property well then you will need to try and remove emotions from the equation as much
as possible look at it as a financial deal as if you are buying stocks on the stock market
trying to take your emotions out of it and asses it for what it.
Tip number seven is to set your investment goals before you go ahead and invest this
is a mistake that many people make is that they say I want to purchase 10 properties
in 10 years or I have a new year’s resolution to purchase a property this year they say
well what do you want to get out of 10 properties in 10 years or purchasing a property this
I want to be rich or I want to make money but by understanding exactly what your financial
goals are then you can actually purchase property for you that will move you towards that.
If you want passive income then it’s not going to make a whole lot of sense for you to go
out and purchase a negatively geared property, if you want fast capital growth then it might
not necessarily be good to purchase in a rural area even though its positively geared and
may not have the predictions of capital growth that you want, understanding what your financial
goals are first you can then go out you can then look at property then you can assess
it based on will this help me achieve if my financial goals or will this actually take
away from what I’m trying to achieve financially.
Remember investing in property is a vehicle for financial success it’s a means to an end
it’s not the end itself, you may not just want purchase that property you want to achieve
something financially know what you want to achieve and try to buy property that will
help you to achieve that.
Tip number eight is to talk to the neighbors, go around do some door knocking talk to little
old Mrs. Jones talk to the neighbors and ask them about the street ask them about the neighborhood,
ask them about if there’s anything that they need to know.
Sometimes talking to the neighbors and asking the neighbors is less about the neighbors
actually say and more about who the neighbors are, you can find out a lot about the street
a lot about the suburb by talking to the people who live there and understanding what kind
of people they are, I do suggest you go out and talk to the neighbors go to the local
coffee shop sit there talk to people there who come in, find as much about the area from
the locals as you can.
Tip number nine is not to be in a hurry, slow down, let’s just put the brakes a little bit,
when we want to buy our first investment property we want to buy out we want to go out we want
to smash it, we want to purchase it as quickly as we can but hold your horses property market
is not going anywhere there’s always going to be properties for sale, there’s always
going to be great investment deals somewhere in Australia don’t be in such a rush to purchase
an investment property that you pay too much for a property or that you buy the wrong property
at the wrong spot isn’t going to deliver your financial returns that you want, don’t be
in a rush, wait for the right property to come your way that suits you that you haven’t
go out and hunt it, just come and sit on your lap.
You have to go and look for it but wait until you find the right property and then go ahead
and consider investing.
Tip number 10.
Do the cash flow analysis, this is something that is that easy to do and this is why many
first home buyers or new property investors don’t actually do the cash flow analysis,
they say well a property is going to cost me x amount and the mortgage is going to cost
me $400 a week.
The property rents for $400 a week my costs are going to be covered because they are the
same; you obviously haven’t done the cash flow analysis.
You need to analyze all of the expenses of the property and all of the income including
vacancy rates where the property might seem vacant and you need to assess whether this
is a property that you can afford and again whether it’s going to achieve your financial
Just an idea some of the things to look at need to look at obviously your mortgage, then
you got things like managerial costs you got council rates, you’ve got maintenance on the
property, you’ve got improvements, you’ve got insurance, there’s many different expenses
that you need to pay for that you need to understand exactly what they are, when they
are coming you can predict it moving forward and you can prepare your finances for it.
The last thing you want is to purchase a property thinking it’s going to be positively cash
flowed because you didn’t do the analysis properly that’s actually costing you hundreds
of dollars per week that you cannot afford.
Last tip, tip number 11 is to don’t just negotiate on price, almost everything in property is
negotiable, they are something’s by law that you can negotiate but most people what they
do is that they go in and negotiate on price, I want to get this property for 10 grand cheaper,
or five grand cheaper.
Sometimes it’s even a couple grand cheaper, but they don’t consider negotiating on the
terms of the arrangement, what I mean by that is you can negotiate your things like settlement
dates, you can delay settlement dates you can move them forward you can have all the
access to the property you can put down a small deposit, a bunch of things that you
can do that can actually make the deal more beneficial to you that can help the person
selling the property feel like they got the price that they want.
This can be difficult for new investors to understand but think about it if you are holding
maybe a deposit of $100,000 for an extra month and you getting 6% on that that means you
got to earn half a percent on that $100,000 which is worth $500 in that one month, by
delaying the property for one month its actually worth $500 for you and just very rough and
very simple example, there are ways in which you can negotiate a better deal without negotiating
You may want to do both negotiate on price and then negotiate on the terms as well if
you can but do consider the terms and see if you can create a better deal for yourself.
There you have it, there’s my 11 tips for buying your first investment property, we
wanted to look at hundreds of properties and research the area in great detail, I also
said don’t always believe everything the real estate agents say because they may stress
the truth just a little bit, consider convincers and solicitors which ones going to work better
for you, get your building and pest inspections done, avoid getting emotional when purchasing
your property, make sure that you set your investment goals before you start looking,
do some door knocking, go and talk to the neighbors, don’t be in a rush, do the cash
flow analysis can’t stress that one enough and don’t always just negotiate on price.
If you want more videos, audio and articles just like this one you can get them over the
blog, head over to positivecashfloaustralia.co.au and I will see you on the next episode.
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