The 20 questions to ask before you buy an investment property: Margaret Lomas
Margaret Lomas has simplfied her “20 must-ask questions” before you buy an investment property saying it’s essential that you buy with your head and not your heart.
Margaret Lomas is the host of two weekly property investment shows on Sky News Business Channel 602; 'Your Money Your Call' and 'Property Success with Margaret Lomas' which she creates and produces.
Margaret regularly travels Australia summing up the potential of the investing landscape for her 'Town Spotlight' where she explores what's happening in the regional towns of Australia.
What is the cash flow of this property? Have I taken into account all costs and can I afford to support it if it is negative?
What is the vacancy rate of the area? Start at the Real Estate Institute (REI) website.
What improvements are being planned for the area? Not all are positive; not many people want to live near a garbage tip or major entertainment venue.
What is the population growth? Nil or negative growth is usually not a good sign.
What is the competition? Look at approved development applications.
Is the property tenant-friendly? Forget fancy fixtures and fittings that will be costly to repair and replace.
What condition is the property in? Always pay for a building inspection and remember it’s tax deductible.
Does it have furniture? This is a must for a tourism property.
Is there a body corporate? If there is, carry out a body corporate search.
Is there a rental guarantee? Remember, a guarantee is only a promise which has no regulatory backing.
What is the current property management arrangement? What does it cost? Does it work well?
Is there a leaseback? Even though an operator is your tenant you need to check them out just like any other.
In the case of a new or off-the-plan property, who are the developers?
Is there a dual purpose, if this is a niche market (purpose-built) property?
What is the land availability in the area? Scarcity will lead to higher prices.
Is it close to a large city? Make sure it’s easy to get to the city by both private and public transport.
How old is the property? Older properties have less deprecation benefits.
Is the property at market value? Research recent sales.
Is the town you are considering based on just one industry? Avoid it.
Are you being commercial in your approach?