Buying Investment Property Checklist

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Buying Investment Property Checklist


Completing your Due Diligence

If you’re new to buying investment property and want to know where to start then look here.

I believe that you need to have goals and solid criteria already in place before you even start looking at the physical property.

Here’s an example of checklists you might want to go through before you start putting pen to paper

Now – you’ve done all that and have found the property that will get you closer to your destination. You’ve decided to put in an offer and know that before you commit you need to do your basic property investing due diligence. What next?


Due Diligence Checklist

When buying investment property you must have a suitable due diligence process to follow.

1 – Verifying the basic assumptions

Rental Assessment

If you already have local rental properties it will be fairly straight forward to get a quick assessment from your current rental manager. They will have more information than the sales agent. A rental manager will know which end of the street to avoid and where the local kids tend to run amok.

Initially a verbal appraisal will suffice, you simply need to verify your assumptions. If you want to move forward you will need to obtain a written rental appraisal in order to obtain finance. Here’s an example of the document I provided to the bank when applying for finance:

buying investment property


Count the Costs

When buying investment property you need to verify the basic ongoing costs you have input to the investment property calculator.

  • Check the Rates.The sales agent should have this information
  • Get an insurance quote. If you own property in the area you can use this as a baseline
  • Condition/Repairs – Ask you rental manager to physically inspect the property for you or do it yourself as well if you’re able. A good property manager is worth their weight in gold here. They can advise what does and what does not need to be done and arrange quotes!

2 – Check the valuation

If you have access to real estate investar then crank it up and check the property valuation against your offer. If the valuation doesn’t stack up then ask yourself why? If you don’t have investar you can obtain individual property reports from in NZ or here in OZ.

In some cases when buying investment property you will need to pay for a bank valuation. In my experience this was only required when the contract price was less than a certain threshold, usually around $100k. You will need to pay for this up front. In one case the report, whilst confirming my valuation, highlighted potential structural issues and the bank declined to finance the property.

If I was fully committed to purchasing and did not have a finance or due diligence clause in my contract I would have been in a world of pain. Instead I was simply spared from having to deal with issues that would have costs me money later.

3 – Property Inspection Reportbuying investment property

If all else is in order I will consider ordering a property inspection report. If I’m not on site this is a no-brainer. It all depends on your level of experience when assessing a buildings structural integrity.

If the property was a small flat in a block I might not bother with a formal inspection report if the structure looked sound to my eye.

It is foolish to overlook such a report if you’re simply trying to save money! It could well cost you a lot more if you end up with a money pit down the track.

The property on the right purchased by me in 2013 sight unseen. I did my homework and thought I was buying at less than market value. But because it was in NZ and I was in Australia I felt it prudent to get a professional opinion as to the maintenance that might be required.

This was the result:

buying investment property

The bottom line here is that there was nothing major to stop me moving forward with the purchase.

So I bought it!

Now if I’d found something I didn’t like I can simply advise my solicitor that I will not be going ahead with the purchase. End-of story! The selling agent may not like it, but just be upfront and tell them straight!

In this case I did choose to spend money on a new heat pump and I had the home painted and re-carpeted. All in all I spend about $10k on a cosmetic renovation which I calculated would give me a good return on an increased rental. The property has been let for the past 12 months and is now cashflow positive.

Until next time,

buying investment property

buying investment property






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