The risks of not researching when buying property

By Anouska Linz
Choosing to purchase an investment property could go wrong if you do not adequately research the market. You may assume that comparing different properties will be a lengthy and tough process, but there are plenty of tools, especially online, that can guide you to finding the right property for you.
There are three main areas where there are possible risks: location, property and the lender.
The location
Property ‘hot spots’ are always a popular topic and experts are constantly trying to predict the up and coming areas. Although these reports can give you an idea of the state of the market, the information is aimed at the general public and does not take your own circumstances into account. For example, you may want to appeal to families with pets, but the current hot spot area does not attract this group of people as the area is mostly small townhouses or apartments. 
You know exactly what type of tenants you want to attract, so even if the process may take a little longer, it will be worth it for you to research your own hot spots. 
The property
Without property researching a property, you could end up spending more than you should or purchasing a house that is in a bad condition.
To ensure you are not overpaying for a property, you will need to look at other properties selling in the area. Real estate agents are a great source to speak to as it is their job to know what properties are selling for in certain areas. Although real estate agents are professionals in the industry, you should speak to several different agents from different companies in order to get a true picture of the current market.  It is also easy to see what other properties are selling for by using Property Reports available online which gives details of actual property sales, rent returns and demographics for your suburb.
Building and pest inspections will help manage the risk of buying a house full of problems. However, it is important to remember that even if there are problems such as foundation issues or termites, you could use this to cut the purchase price of the property when negotiating. However, without these inspections, you could end up overpaying and spending thousands on repairs.  
The lender
When you apply for a home loan, it is important to remember that you will be in a relationship with your lender for the next 20-30 years, so you need to find the right one for you.
According to the Australian Mortgage Snapshot Study 2013, 83% of Australians choose their home loan provider based on interest rates. However, in order to find the right lender, you should look beyond the rate they are offering. For example, there are other expenses such as establishment fees and ongoing fees that may be higher and could end up costing you more. 
As mentioned, you will be involved with your lender for a number of years, so being able to communicate with them effectively is also a huge factor to consider. Not all lenders may prioritise customer service the same, so before you jump in, take the time at the beginning to see who puts in the effort. Even if a lender offers an extremely low rate, if every meeting, phone call or email involves problems, is a low interest rate really worth it? 

Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.

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