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    CPS Property Buying Process_2009-10-28

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    CPS Property Buying Process_2009-10-28

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    1 views5 pages

    CPS Property Buying Process_2009-10-28

    Uploaded by

    sevadevelopments

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Complete Property Solutions

    Guide to Buying a Home or Investment Property

    Buying a home or investment property is not something that people do every


    day, unless of course you are a buyers’ agent! There are many steps that
    need careful consideration and lots of time to get the best result. This
    checklist provides a snapshot of the key steps required in purchasing an
    investment property.

    1. Your goals

    Understand your investment goals and risk profile. You must have a basic
    understanding and belief in the property market before committing any
    investment dollars. Spend some time considering the risks and rewards from
    property investing and speak to your licensed financial planner, accountant
    and other people that have been successful.

    2. Borrowing capacity

    Before commencing a property search, it is important to know how much a


    bank or financial institution will lend you based on your current financial
    position. The mortgage market is very competitive and finance brokers can
    assist you in sifting through the maze of investment loan options. It doesn’t
    cost anything to get finance pre-approval and this will put you in a good
    position to act on a purchase if a suitable opportunity arises. Most pre-
    approvals are valid for 3 months. Knowing your borrowing capacity helps you
    narrow your property search to properties within your price range. CPS
    Property is also a mortgage broker that can assist in your finance needs.

    3. Research

    This step can take a long time and is where the real leg work is done.
    However, by using a buyer’s agent, you can leverage your time and let a
    professional researcher achieve a better result in a shorter time. Astute
    investors begin their search by using strict investment criteria. This includes
    criteria such as land content, location, proximity to schools, shops and
    transport and other physical features about the property that affect future
    capital growth.
    CPS Property makes extensive use of growth predictions from professional
    research companies such as BIS Shrapnel, Residex, Real Estate Institute of
    NSW & Aust, ABS and the Home Price Guide. Through our own independent
    research we gather knowledge from local agents to make our own
    assessment of capital growth potential and rental yields. Combining these
    broad overviews with “on-the-ground” localised knowledge provides our
    clients with a competitive advantage when buying investment property. CPS
    Property is also able to access “silent listings” where a property is not
    advertised to the general public.

    4. Evaluate a short-list

    Extensive research then results in a preliminary list of properties to be


    considered. A handful of properties are selected from this list for you to
    inspect. Doing this yourself can take many months and it is easy to overlook
    properties that meet the investment criteria. The time we spend with you
    viewing the shortlist will provide invaluable insights into the local market and
    help clarify your decision-making.

    5. Negotiate

    Once you have selected the most suitable property from a short list, we will
    negotiate the lowest price possible and the best terms and conditions for the
    contract of sale.

    6. Review contract of sale

    After the offer is accepted, the contract of sale is forwarded to your solicitor for
    review. The solicitor will examine the special conditions, inclusions and
    settlement term consulting with you and liaising with the vendors’ solicitor
    requesting changes if required.

    7. Exchange of contracts

    The solicitors then exchange contracts along with a 10% deposit. Once the
    exchange has occurred the purchaser has secured the property. (Note:
    contracts of sale can also be exchanged by the vendors’ agent if the
    purchaser pays a non-refundable deposit of 0.25% of the purchase price).
    Once the contract is signed the purchaser has a 5 day cooling off period in
    which they may rescind the contract but forfeit the 0.25% deposit to the
    vendor.
    8. Pest & Building Inspection

    Pest and building inspections are usually done during the 5 day cooling off
    period. This also allows time for the solicitor to undertake the relevant title
    searches and enquiries in the property. Pest and building inspections should
    highlight all the problems with the property which often discourage
    prospective purchasers going ahead. However, the key items to look out for
    are evidence of current termite damage and evidence of serious structural
    movement which could cause problems later. All houses will have some
    problems and it is important to work out if they are simply cosmetic or whether
    they require major works.

    9. Unconditional finance approval

    Once you have signed the contract it is essential to provide a copy of the front
    page of the contract and a rental appraisal letter to your bank or mortgage
    broker. This will enable the bank to provide an “unconditional finance
    approval” and prepare mortgage documents for you to sign. You will also
    need to arrange building insurance and provide the bank with a certificate of
    currency showing the property is insured from the settlement date.

    10. Settlement

    Your solicitor will attend settlement and arrange payment to allow transfer of
    title into your name. The bank will provide cheques (up to the agreed limit) for
    the balance owing (less the deposit paid). Various adjustments need to be
    made for stamp duty, solicitor fees, council and water rates, mortgage duty
    etc.

    11. Property management

    Engaging a property manager to find a tenant and lease your investment


    property is money well spent. If the property is in Sydney, CPS Property will
    locate a tenant, screen the tenancy application, prepare the lease documents,
    arrange the bond, collect the rent, conduct regular inspections and coordinate
    repairs. Fees for property management are tax deductible against rental
    income.
    12. Tax depreciation schedule

    To maximise the tax deductions on the property you should engage a quantity
    surveyor to prepare a tax depreciation schedule. Depreciation can be claimed
    on

    the building structure and the fittings and fixtures within the property. This
    schedule will itemise the amounts that can be claimed each year in
    accordance with relevant tax laws. CPS Property can recommend reliable
    and cost effective quantity surveyors to prepare these schedules.

    13. Landlord insurance

    Landlord insurance provides protection from tenants leaving without paying


    rent, damaging your property, public liability, legal expenses and more. This
    insurance provides you with peace of mind knowing your property is
    protected. Insurance premiums are tax deductible.

    14. Monitor and maintain your investment

    Like most things in life, investment property requires ongoing maintenance.


    Tenants are unlikely to renew their lease if there is a constant string of
    problems with the property. Keeping your tenants happy is a great way to
    ensure a constant stream of rental income.
    Once you have held the property for around 12 months you should consider
    getting a new bank valuation and if the property has grown in value and using
    the additional equity to purchase another investment property. Leveraging the
    equity from your investment property enables you to grow your property
    portfolio at a faster rate.

    While you may be tempted to sell your investment property in the first few
    years, it is usually better to hold the property for the medium to long term
    (provided your cash flow is sufficient). The price of property in the major
    capital cities of Australia has generally doubled every 7 to 10 years. Once you
    sell, there is no further opportunity for capital gain. Property investment is all
    about generating equity from an appreciating asset. Sit back and enjoy
    watching your assets grow.
    Further information contact:
    CPS Property
    Suite 403, 55 Holt St
    Surry Hills NSW 2010
    Ph: 1300 YES CPS (937 277)

    Disclaimer: The above guide must not be taken as specific advice for your personal situation. CPS
    Property is not a licensed financial advisor. Please seek independent advice from qualified legal and
    financial professionals before taking any action.

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