Buying the right investment property can be a mission. On top of getting your financial ducks in a row, you’ve also got to find a great location with plenty of potential for capital growth. Then, once you’ve found the suburb of your dreams, you need to look for the right investment property… and make sure it’s not a dud.
The fear of buying a dud property has discouraged countless property investors from purchasing, because they’re afraid of the risks that come with (unintentionally) investing in a lemon. But one of the 59 biggest investing mistakes, according to Helen Collier-Kogtevs, one of the leading property educators in Australia, is letting fear hold you back.
“Nine times out of ten it is people’s lack of understanding, education and exit planning that creates fear or brings them unstuck. Once people have been educated and understand all the nuances that lead to successful property investing, they gain the confidence to be able to appreciate just how low risk property investing can be”
Put simply, you shouldn’t let the fear of buying a dud property get in the way. Of course, investing always comes with risk of some kind. But as long as you do your research and equip yourself with the knowledge to buy a property you’re confident in, you’ll be able to keep that risk to a minimum.
So, what are some of the warning signs of a dud property to keep an eye out for?
Download this checklist to jump straight into the nitty-gritty.
Warning signs of a dud property
It doesn’t match the search criteria of tenants in the area
When you’re buying an investment property, you should be buying with your future tenants in mind. After all, the last thing you want is to have your property sitting empty for weeks on end because it’s not what tenants in the area are looking for.
So, think twice about buying a second-floor apartment in a building without a lift - especially if a large portion of the rental population consists of retirees. Reconsider the gorgeous 1-bedroom apartment you’ve fallen in love with if 3-bedroom houses are the ones that are renting out quickly in the area. If you do your research on what tenants in the local area want in a home, you’ll minimise your chances of investing in a lemon.
Repair & maintenance will cost you more than a renovation
It goes without saying that an ideal property is one that comes without a multitude of repair & maintenance issues. Especially if you haven’t set aside a budget for a planned renovation, be wary of properties which will require you to spend more on basic repairs and maintenance, when you could in fact be saving more with a renovation.
Look out for structural issues, water damage, and signs of pests. Consider things like:
- Are there any cracks in the wall?
- Is there any wetness in the walls and floors? Is there any mould?
- Are there any signs of pest infestations?
By performing due diligence before you purchase a property and managing the property, you’ll be saving yourself a lot of headaches down the line.
How to minimise your chances of buying a dud
The best way to go about minimising your chances of investing in a lemon (and maximising your chances of success!) is by asking the right questions.
We’ve partnered with Helen from Real Wealth Australia to provide you a checklist of the questions you should ask yourself every time you’ve got your eyes on a new investment property.
This checklist will guide you through the process and help you ascertain whether the property you’re contemplating is a dud, or if you can jump right in with confidence.
Remember, don’t let the fear of buying a dud property hold you back. If you do your research, you’ll know you have the best chance for a successful investment.
Note: this checklist is part of Real Wealth Australia’s The Red Book (worth $137) which provides valuable research tools to help investors salvage a sinking property portfolio. :Different has partnered with Real Wealth Australia to provide valuable property investing tips and information to :Different subscribers.
Disclaimer: The information on this website is for general information only. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. :Different and Real Wealth Australia are not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.