9 Steps To Successful PROPERTY INVESTING In Seven Hills NSW
Where do I start? A common question asked by all people who have heard about property investing and understand that it is an avenue for wealth creation but are not quite sure what or how to buy a property.
1. Decide what sort of investor you wish to become.
Do you want to invest for Positive Cash flow, Negative cash flow, renovate & sell, Subdivide or develop. These strategies are very different from each other and require a different skills set. Of course you can learn these skills sets but you first need to master one strategy before moving onto something different.
An example of a strategy you might follow is; buying and holding, receiving negativing gearing benefits to reduce your tax and buy again when your equity has increased. Next you might move onto buy, renovate and then hold. This increases the equity quicker and also allows you to get a greater rent. This can then lead you into renovating properties and then developing. Of course these strategies aren’t for everyone, so consider what you actually want to achieve out of investing.
This is a very important step. Before you go looking for properties you need to check how much finance you can get. It might be that you have to pay off a credit card, you might need to save a larger deposit or you may need to look for another job. These will all form part of your goals.
3. Set out your goals.
After deciding what sort of investor you want to become and determining if you can obtain finance, you need to set out some goals that will focus you on becoming that investor. Your goals should be specific and achievable. You need to start small, unless you have endless funding this is not something that will happen tomorrow. Property investing is a long term strategy.
4. Make an appointment with your accountant to discuss structuring options.
Once you have decided on what type of investor you want to be and how many properties your finance will allow you to buy, along with your goals that you have set, your tax accountant in Sydney and you can sit down and work out a structure. Your structure will vary depending on negative gearing or positive gearing, it will also be completely different if you wish to buy and sell or develop. Getting your structure right from the beginning is the most important part of this process.
The costs involved to setup a property structure now will vary and you might think they are expensive, but trying to transfer property later could result in you having to pay stamp duty on the transfer. If you are thinking of transferring property to a trust to avoid bankruptcy and creditors getting it, think again, there is a 4 year claw back in which it can be clawed back to become part of your bankruptcy. The upfront cost will become well worth it.
5. Research your investment property.
Become a property specialist within your chosen area. You might select a small area of Sydney or a larger area like the Inner West. Whatever area you choose needs to be affordable within your budget and needs to fit within your investing profile and goals. I always look for properties within 15km of capital cities to reduce my risk.
6. Look for properties for sale.
Now the fun begins. you will need to sort through the numerous amount of properties for sale and set up appointments with agents to go through the properties. You should use a checklist to make sure the property has everything that you have learn’t from your research to bring in top dollar rental.
Register your buying requirements with agents in your local area and on all relevant real estate websites. Communicate regularly with local agents so they inform you of new listings as soon as they become available.
Develop a relationship with a Real Estate Agent around Seven Hills who specialises in your preferred area and get them to work for you. By doing the Real Estate Agent will leave no stone unturned searching property that suits your requirements and they may even find a home for you that is not currently on the market!
7. Submit offers and start to negotiate.
Once you have found a property that fits your criteria, submit a realistic offer that you believe is market value for the property based on recent sales and your research. Not every offer you submit will be accepted and you may need to negotiate different things within your offer. For example, you may ask for delayed settlement, or early access. Make ALL offers subject to pest & building and finance approval, this is even if you have approval from the bank.
8. Appoint a Solicitor.
They will review the contracts and point out an issues, they will also organise your pest and building inspections for you. They will also handle any further negotiations you need and will conduct the settlement of your property.
You have bought your first investment property. Now to do it all again…
About Brad Callaughan
Brad Callaughan is a specialist in taxation, accounting, business advisory and financial planning. He is the managing director of Callaughan Partners that was formed to deliver and exceed client’s expectations, whilst charging upfront fees. Brad is an avid property investor and renovator. Brad is often quoted and written for such publications as Australian Property Investor, Sydney Morning Herald, The Age, My Business magazine, Smart Start-up, Dynamic Business, Flying Solo, Shoe String Media, PropertyInvesting.com. Brad enjoys developing his own business interests and property portfolio along with his interests in golf, horse and dog racing, NRL, sports & fishing.