Once you know what to look for, it’s relatively easy to spot sneaky real estate ploys that are designed to entice you into buying a lame duck.
When you were younger you may have come across the phrase, “If it sounds too good to be true, it is.”
According to Peter Agapiou, principal of Mr Realty Townsville, you would be wise to hold onto this advice if you want to get ahead in property!
“The number one thing to remember when dealing in any kind of real estate – whether buying or selling – is that there’s no such thing as a free lunch,” he says.
Agapiou warns of several “buzz terms” to be wary of:
Rental guaranteed investments
“I have found this type of investment can be fine, as long as you bear in mind that you will almost certainly pay a premium,” he says.
By this he means the rental guarantee will be factored in to the sale price. Also when buying investment property, it is also important to know that when a property is new it will receive the highest rent, and once the shine has come off the property, it is not unusual for rents to drop.
“At best, the rental guarantee will be what is achievable on the open market; at worst, the developers are chipping in the rest to make the investment sound good, and you end up paying too much for the property,” Agapiou adds.
In Agapiou’s opinion, ‘negative gearing’ is “the most overused, misrepresented term in the industry”. “While agents and developers use the term to sell property, the fact is that unless you are a high income earner, it serves no real purpose at all,” he says. “It’s important that buyers weigh up the value of going into hundreds of thousands of dollars worth of debt, to save a little on their tax.”
Buying off the plan
Unless you are going to receive significant savings by buying off the plan, why would you, Agapiou asks. “There are so many risks associated with this type of investing that I often wonder why people do it,” he says.
“Unless you are there from the ground floor, or you are lucky enough to snag the right timing, it’s better to wait until construction is complete before buying. Developers often claim that properties are ‘selling fast’ – particularly in high-rise residential properties – in order to entice buyers, when in reality they themselves are purchasing properties, only to on-sell at an inflated price soon after completion.”
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan