In today’s hot property market, finding a good deal is tough – unless you know the tips and tricks to bag a bargain.
Here are a few ways to get the upper hand and score a great buy.
A vendor who is eager to sell is the most obvious place to look for a bargain investment property.
There are a number of reasons a vendor may be in distress such as a divorce settlement, a deceased estate, the vendor has bought elsewhere or a mortgagee sale.
Usually the seller needs to quickly dispose of the property and is willing to cut back on the price.
Although it is not the most pleasant of situations, you are doing the vendor a favour by taking the property off their hands. And ultimately, it is a business transaction – if you don’t make a move, someone else will.
Only last month, I witnessed a vendor being presented with two offers.
One offer was $17,000 less than the other. However, as the cheaper offer had no other conditions attached – apart from a finance clause – the buyer was flexible to negotiate a longer settlement to accommodate the vendor's circumstances.
And the vendor was happy to take the lower offer.
Be smart, be fast
You need to be on the lookout so you recognise an opportunity when it arrives.
Know the market – spend a lot if time researching. Define your criteria on what you’re looking for and get informed.
If you set specific criteria around your next purchase, research the local area until you know everything about it.
You’ll then be able to recognise a bargain when one raises its head – though, of course, none of this will make any difference if you don’t act when the opportunity arises.
Today, I had a property that was only two years old in a capital city and the vendor was willing to sell for $440,000. The property was renting for $565 per week.
While quite a number of investors wanted to have a detailed discussion to identify if it was just too good to be true, one investor appreciated the value and the return, and took action to take the property off the market.
By the time all the other investors dotted their i’s and crossed the t’s and realised it really was a good opportunity, the savvy investor already had taken the property off the market.
Preparation is key
There’s no point in looking if you don’t already have your finance arranged. Know how much you can afford to borrow and get organised.
Ensure you know what sort of rental income you need to receive in order to service the loan and look for properties that will provide this.
It’s also a good idea to line up a trusted pest and building inspector to call upon quickly when you find a winner.
Work the angles
A great property bargain is like a rough diamond – you may need to dust off a little dirt to see the true potential.
Think outside of the box and be objective when looking for a hidden gem.
Look for places that you can easily add another bedroom or buy properties on large blocks of land where the zoning supports you sub-diving into smaller blocks.
On a bigger scale, you could look to team up with other owners to combine a row/block of properties that could potentially turn into a development site, or you could accumulate these yourself.
Growth areas set to boom
Identify locations with growth drivers.
Check for things like major transport routes, new infrastructure, new university campuses or schools going in. These are all signs that an area is set to grow.
The key to bagging that bargain ultimately depends on knowing your criteria, knowing the market and being savvy when it comes to different opportunities.
Paul Wilson is an Independent Property Investing Expert who's been educating and coaching investors since 2001. Author of 7 Deadly Mistakes Property Investors Make and How to Avoid Them, he also manages Educating Property Investors, We Find Houses, and We Find Finance.
Through his books and websites, Paul provides valuable, independent guidance and support by teaching strategies on how you can invest successfully, while protecting yourself from the common mistakes that trap many investors from reaching their full potential.
Paul doesn’t promote cookie cutter strategies, instead he demonstrates how you can create wealth as a property investor regardless of your budget, location, strategy and risk profile. Paul makes his home on the Gold Coast and spends his leisure time enjoying adventures, surf and sun with his wife and five children. Protect and grow your portfolio with knowledge.