BUYING AN INVESTMENT PROPERTY MADE SIMPLE

BUYING AN INVESTMENT PROPERTY MADE SIMPLE

CONTENTS Think like a successful property investor Find a mentor Assemble your professional investment team Outline your investment goals and strategy Maximise tax deductions Assess your finances Consider buying property in super Use a mortgage broker to find the best home loan Research where to buy Seek advice from a property expert Be aware of spruikers Research what to buy Contain your emotions Don t just rely on online research. Do the legwork Appoint a licensed conveyancer/solicitor Know how to negotiate price Be prepared if buying at auction Understand the settlement process Appoint a property manager Make your property appealing to tenants Organise insurance. Protect yourself and your investment Take the leap 02 03 04 05 06 07 08 08 09 10 11 12 13 13 14 15 16 16 17 18 19 19

INTRODUCTION So you re looking at buying an investment property but have no idea where to start? You ve come to the right place. This practical guide is designed to make buying an investment property as simple as possible. It s no secret property investment has paved the way to wealth for millions of Australians. For first time investors taking the dive and buying your first property can seem daunting. If you find yourself constantly monitoring property prices or if you've heard about those who got lucky and purchased property at just the right time and think, if only I had jumped at the opportunity when I had the chance! it s time to take action and turn your investment dreams into reality. In this guide you will find 22 tips, designed to break down and simplify the steps involved and provide you with the ultimate guide to property investment. 01

THINK LIKE A SUCCESSFUL PROPERTY INVESTOR To be a successful property investor you need to think like one. The right mindset is one of the main factors which separates those who go on to grow an enviable property portfolio and those who wind up exiting the game, deciding property investment just isn t for them. Here are some common mindset traits of those who ve succeeded in the property investment game: The ability to think long term Don t buy your first investment property and expect to get rich overnight. Property investment is generally considered a secure long term investment. The property market moves in cycles so expect to experience periods of highs, lows and steady patches on the long journey to wealth. Be prepared to do the research and expand your knowledge base The more you feed your property investor brain the better. Educating yourself on property investment will make you better equipped when it comes time to make tough decisions. Read books, articles and online blogs on property investment from credible sources. For example, Michael Yardney s ebook, How to Develop the Mindset of a Super Successful Property Investor, is a great starting point to understanding the importance of having the right mindset when entering into property investment. One tip he shares in this report is: If you want to become a true wealth creator if you want to become one of Australia s super successful investors, in fact super successful in any area in your life you are going to have to learn to think differently than the majority of people, you are going to have to learn to move outside your comfort zone. 02

FIND A MENTOR The best mentors are those who practice what they preach. Many of Australia s most successful investors are happy to give out advice and share their secrets to success online through articles and blogs. If you re unsure of where to start, visit Property Thought Leaders an online platform which collaborates the work of Australia s Leading Property Investment Authors. You can watch their videos or read their blogs and articles to find out their latests thoughts, opinions and advice. For those who struggle with decision making and find that the more they research property investment, the more overwhelmed you feel, it may be worth consulting with a wealth coach. Just like you would hire a personal trainer to help you set and achieve your fitness goals, keep motivated and stay on track, a wealth coaching service offers the same support for property investors. 03

ASSEMBLE YOUR PROFESSIONAL INVESTMENT TEAM Successful property investors know the value of good financial advice and when to call in the experts. Having the support of good financial advisers will make you a confident investor and stop you from second-guessing yourself and your investment decisions. It will also save you time in trying to learn and understand technical jargon. Financial planners and accountants know the highly technical financial aspects of property investment better than anyone else so it pays to have these specialists on your team. How do you find an adviser you can trust and one you feel comfortable with? First, you need to understand the specific roles of these professionals and what to expect from them. What does a good accountant do and why do I need one? Watch this video or read the following: An accountant applies tax rules to your specific circumstances. The government has tax rules which are applied equally to all. It is the interpretation and subsequent implementation of tax rules which differentiates good and bad accounting. This is why you may hear someone say I went to this new accountant and he/she got me a higher return. It is not because they used different rules, it was how and when the rules were applied, along with a complete understanding of your situation so that the rules could be used in the best way possible within the limits of the tax law. Accountants are not licenced to provide advice. Some choose to also have financial planning accreditations and there is a movement to have simple rules applied so accountants can provide advice. But as a rule, they don t provide advice. When thinking about using an accountant, understand because of licensing rules they will only think of situations which have already happened (within the tax year or previous years). It is how accountants are conditioned to think and how they position themselves in the advice market. What is a financial planner and what do they do? To best answer this question watch this video and listen in as Otium Group s CEO breaks down the role of a financial planner. Financial planners specialise in applying future logic to your specific circumstances. They are only licensed to give advice and can t do accounting or give you tax advice. Everything a licensed financial planner does has recourse. For the client, this means every interaction from your adviser must apply to your needs, be focused on your individual goals and be reviewed annually. How do you know when you ve found the right accountant and financial adviser? The sleep test is the best indicator to determine whether you ve found the right accountant and financial adviser. What is the sleep test? It is just as it sounds, the ability to lay your head on your pillow and not lose a wink of sleep over the state of your investment plans. A good financial planner and accountant are always available and easy to reach when you have a question. At the end of the day it is your future, if you are not able to contact the business who is providing you advice, or they won t call you back it is time to move on. 04

OUTLINE YOUR INVESTMENT GOALS AND STRATEGY What do you hope to achieve through buying an investment property? Do you want to boost your retirement savings, create an income stream or make money through capital growth? Whatever you hope to achieve you need to plan for your success. Sit down with your financial planner and accountant who will help you develop clearly outlined strategies and timeframes to achieve your financial goals. In it s simplest form, developing an investment strategy that suits you is all about risk versus return. How much risk do you need to take to get a defined outcome. Initially outlining what you are aiming to achieve will go a long way to understanding exactly how much risk you need to take to get there. When speaking about risk, we mean debt levels, tax structures, location and type of asset. Of course, legislation risk is something we live with through government changes which can never be foreseen. A good financial planner or accountant will always be ahead of potential legislation changes. 05

MAXIMISE TAX DEDUCTIONS There are certain tax benefits property investors can use to their advantage. Save yourself time and money and seek advice from your trusted accountant. The right accountant will make sure you are making the most of potential tax benefits available to you and that your strategies use the tax advantages efficiently, while staying within the law. For example, if your property is negatively geared, that is your investment is at a loss because repayments and ongoing costs outweigh the rental income, you may therefore be allowed to offset your loss by deducting your expenses from your other employment or business income. The following are just some of the tax deductions you may be able to claim as a property investor: Land tax Repairs & maintenance Pest control Phone Property agent fees & commissions Travel undertaken to inspect or maintain the property or to collect the rent Water charges Landlord insurance premiums Do you have a quantity surveyor report? For a cost of around $550, there may be thousands of dollars in tax deductions available.for a complete list of rental property expenses you can claim visit the ATO website. If you are looking to rent a property that you have owned and previously lived in, keep in mind that any repairs being made before renting it will NOT be a tax deduction. This is because these costs are seen as rectifying wear and tear that is private in nature. 06

ASSESS YOUR FINANCES Before getting too carried away and beginning your property hunt, you need to know how much you can afford to invest. Does your current lifestyle and financial situation allow you to invest in property? Can your budget handle the buying costs and any unexpected costs involved in investing in property? What costs are involved in buying an investment property? The following list are just some of the fees and payments property investors must be prepared to fork out: Financial advice Legal Building inspections Mortgage establishment Deposit STAMP DUTY Stamp duty Insurance Mortgage repayments Council rates Maintenance costs Utilities Property management fees Body corporate fees and more. The best way to get an in depth look at your financial situation is to book in a meeting with a trusted financial planner. This is their area of expertise and they will provide the hard data for you to determine whether or not you should go ahead with your property investment goals. They will factor in all of the costs involved and show you exactly how much you can afford to invest. Take advantage of online calculator tools To find out how much you may be able to borrow to buy an investment property use an online mortgage calculator, like the one provided by Aussie. The Your Mortgage website also provides a great calculator tool which factors in all of the costs involved in buying an investment property, to calculate if you can afford to invest. 07

CONSIDER BUYING PROPERTY IN SUPER Buying property in super is become increasingly popular as more Australians discover the advantages of Self Managed Super Funds (SMSFs). To buy property in super you will need to establish a SMSF. What is a SMSF? SMSFs are the fastest growing sector of Australia s superannuation system. Put simply, it is a retirement saving vehicle for its members. To simplify it even further, an SMSF is a bank account with rules. Unlike retail and industry super funds an SMSF gives trustees greater control over their retirement planning. An SMSF operates under a trust structure and can have up to four members. Trustees have control over how they choose to tailor the investment strategy of the fund to meet their retirement needs. SMSFs can invest in property but the property purchase must be for the sole purpose of supporting the SMSFs investment strategy in building wealth for retirement. What s involved? The process is complex and even the ATO advises you not go at it alone. Establishing the trust, ongoing compliance and the paperwork involved in buying property in super all demand a certain level of expertise and time. Because there are strict rules around how to buy property with an SMSF, it is best to seek help from SMSF specialists like Otium Group who will take the complexity out of buying property in super and make it as simple as possible. Visit the Otium Group website to find out more and use the calculator to see if you qualify. USE A MORTGAGE BROKER TO FIND THE BEST HOME LOAN Do you have time to sift through endless finance products, trying to understand complex terms, features and fine print to work out which home loan is right for you? To save you a significant amount of time and money we recommend consulting a mortgage broker and even better, one who specialises in investment loans. These professionals know the ins and outs of dealing with banks and how to get you the best deal. Variable, fixed or split rate, interest only or line of credit loans? A mortgage brokers job is to understand the range of finance options available and match you to the best loan to achieve your goals and investment strategy. If you want to be hands on and do your own research on home loans there are several websites like; Rate City, Aussie Home Loans, Mortgage Choice, you can tap into to compare different home loan products from different lenders. 08

RESEARCH WHERE TO BUY Where you buy is a key element in your property investment success. Ultimately, the ideal location shows; promising signs of capital growth over time, a secure rental market and is in a market where the house prices meet your budget. Where to start your search Talk to property experts including real estate agents, friends and family, who have bought an investment property, about locations they have invested in or recommend. This will give you some insight into markets you re unfamiliar with or it may reveal possible hotspots you re not aware of that may be worth further research. See what industry experts and insiders are saying online at Property Observer. This website covers the latest property news, anaylsis and information on the best performing suburbs in Australia. Once you ve developed a list of potential suburbs, head to Propertydata.com.au to gather data on these areas. Simply type in the postcode or name of the suburb you wish to explore and it will display the latest sales and auction results, median property prices and suburb profiles. 09

What to look for when researching where to buy an investment property? Collect the following data on each area/suburb you re looking to invest in to help narrow down the most ideal location for investment: Population growth Vacancy rate Employment: is the area you are looking at dependent on a sole industry eg mining? If this industry slows down the value of your investment property may drop. Lifestyle and access to amenities: schools, public transport, shops. Rental history Infrastructure and planned developments: will these changes add to the value of property in the area or impact it in a negative way? SEEK ADVICE FROM A PROPERTY EXPERT If you ve spent some time doing your own research but you re still not 100 percent confident about where and what to buy. That s OK. As mentioned above successful investors know when to call in the experts. Buyer s agents are professionals who are licensed to give unbiased advice, hunt down the right investment property to suit your circumstances and act as an advocate for you when it comes to negotiating price. 10

BE AWARE OF SPRUIKERS We hear about dodgy dealers on the news and in the media, ruining investors dreams and giving the rest of the industry a bad rep. Keep an eye out for the following signs which may indicate you re dealing with a spruiker Promises of get rich quick schemes. If it sounds too good to be true chances are it s a scam. If the adviser is persistently inviting you to property seminars, beware as these workshops and information sessions are usually designed to draw in victims and heavily sell overpriced developments or plans with the promise that these investments will make you instantly rich through high growth. High pressure sales tactics. Don t let anyone pressure you into signing a contract you are not ready or comfortable with. Trustworthy property investment professionals will lend advice they will not pressure you into taking action. The sale price spruikers offer is often non-negotiable and they will hurry your decision making process by telling you there is limited supply and that you should get in quick or you will miss out. They want to control the process The last thing a property spruiker wants is for you to find out the real value of the property they are trying to sell you. To keep you in the dark they will try to control the entire buying process from what mortgage brokers to lawyers you go through. This prevents you from seeking independent advice. If they talk to you about taking the equity out of your home, run. Get an independent valuation of the property they are convincing you to invest in and don t be surprised if you find out the property is overpriced. To protect yourself always do your research on the person giving you advice. Understand what is their role and title, the type of advice they are giving, what credentials and qualifications they hold and how they get paid. The government s Money Smart website is a goldmine for information and tips to protect consumers from falling victim to investment scams 11

RESEARCH WHAT TO BUY The type of property you buy is just as important as where you buy. To work out what is going to be the best investment choice, you will need to learn more about your chosen location. As an investment property the goal is to receive a rental income so it makes sense to work out what types of property are most in demand by tenants. To do this you will need to research population demographics. The local councils website or the Australian Bureau of Statistics are the best sources for information on the age, income, marital status of an area s population. How does this information help with my property search? If your research on a specific suburb, for example, shows a significant percentage of the population is between the ages 25 to 40 and married with families, it would be safe to assume houses with three or more bedrooms are likely to be in high demand and therefore are a better investment option. You will also need to gather research on rental returns for similar properties in that suburb as well as vacancy rates to get a clear idea of whether this is the best type of property to invest in. Now that you know what type of property you're in the market to buy you can begin the hunt. Start listing and inspecting properties to buy. Conduct your search online through realestate.com.au, visit real estate agents and make use of the following property apps: The CommBank Property Guide Real Estate.com.au app Domain Real Estate and Property app 12

CONTAIN YOUR EMOTIONS Smart investors buy with their head. The aim of investing in property is to create wealth, so it makes sense to treat your property investments like a business. When hunting and inspecting potential properties to buy, don t let emotions cloud your judgement. Make rational decisions, based on hard data and consult with professionals, whether it's your financial planner, accountant, lawyer or conveyancer if there is something you are unsure of or need clarifying. You are not buying your dream home or a property for you and your family to live in, therefore there is no need to get too attached or caught up in the cosmetic appeal of a property. DON T JUST RELY ON ONLINE RESEARCH DO THE LEGWORK The internet is the ultimate time-saver but to really get a feel for the location and property you are looking to buy you need to see it for yourself. When you inspect these potential properties make sure to write down notes. Here are some things to keep your eyes peeled for: Structure of the property Check over the interior and exterior. Look for cracked walls/floors, water stains, sagging ceilings. Does the house appear as if it s been maintained or are there tell tale signs that it s falling apart? A housing and pest inspection later on down the track (if you do decide to buy the property) will reveal serious issues but by doing this initial inspection yourself, if you notice there are just too many structural flaws that will add up and prove too costly to fix you can cross the property off your list and move on with your search. Other houses in the area Do other properties in the area appear rundown or do the majority of properties look well maintained and cared for? Are there many new houses in the street and surrounding areas? Does the local shopping area looks like its experiencing growth or does it look rundown? 13

APPOINT A LICENSED CONVEYANCER/SOLICITOR Things are getting serious. You ve inspected a property a few times, it feels like the right one and ticks all of the boxes. To assist you with the technical processes, legal jargon and hefty paperwork involved in buying property, a licensed conveyancer or solicitor is your best ally at this stage of your investment journey. What does a conveyancer/solicitor do? Examine the contract, prepare and lodge legal documents Arrange the building and pest inspection Research on the property Certificate of title, checking with authorities for any issues affecting the property (e.g. check for state/local government planned developments that may affect the property), check for outstanding arrears or land tax obligations, disclosing any information that hasn t been brought to your attention. Arrange payment of stamp duty Complete any final checks prior to settlement Attend settlement Calculate the adjustment of rates and taxes Oversee and act on your behalf during the settlement process of the property When looking for the right conveyancer, shop around, ask for referrals, check their accreditations and ask what their fees are upfront. 14

KNOW HOW TO NEGOTIATE PRICE You ve found the right property, now how do you go about getting it for the right price? It s all about the art of negotiation. As Property Mavens founder Miriam Sandkuhler writes: negotiating a property deal is part research, part strategy, part psychology and at times, part fly by the seat of your pants! The aim of the game is to know how much you are willing to pay but work up to this limit through the negotiation process. Here s how to play the game: 1. Ask the agent the important questions about the seller's intentions: Why are they selling the property? Where did this asking price come from? How long has the property been on the market? Have they had any other offers? Directly asking the agent these questions will put them on the spot, giving you a better indication of how flexible the seller is with their asking price, whether or not they re looking for a quick sale and most importantly, how low you should go with your first offer. On the same note, be ready for any questions the sellers agent may spring on you about how much you are willing to spend. If they know how high you are willing to go, they will aim to get this price from you. 2. Know what the property is worth: Thanks to the steps earlier in this guide, you have a good understanding of what the value of this property is and what comparable properties in the area have sold for. If the building inspection came back with faults and repairs, use these estimated costs as leverage when negotiating the price. This knowledge on the market value of the property is extremely important as it tells you what a reasonable price is and where to start your bargaining. 3. Make an offer: This is the part you need to get right. Starting too high will leave you little room to move but starting too low means the agent and seller won t take you seriously or other interested buyers will come in with a higher offer. Let the seller know you're a serious buyer, you have your finances in order, the deposit is ready to hand over and your legal team is ready to go forward with the paperwork. If you make an unconditional offer remember you are obliged to continue with the sale if your offer is accepted. Conditional offers however, are more common (unless buying at auction) and can buy you more time. If the seller accepts your offer, the only way out of the contract is if a party doesn t meet specific conditions of the contract. 4. The seller will either accept, reject or come back with a counter offer. If they accept congratulations, you can continue with the buying process. If they reject or come back with a counter offer you will need to assess your position and accept the counter offer, reject it or enter a new offer. 15

BE PREPARED IF BUYING AT AUCTION If you ve never attended an auction before the process can seem intimidating. Relax. If you ve followed the steps above and have everything in place prior to the auction, you are ready to start bidding. Here are 3 essential things to check off before entering into an auction: 1 2 3 Your finances are in order You know how much you can afford to spend and your lender has pre approved the loan. If you are buying property in super your SMSF has been established & you understand the rules around buying property in super. You ve gone over the contract & you are happy with its terms Remember if you make the highest bid at auction and it is accepted, you must sign an unconditional contract immediately. Therefore, any issues you have with the terms must be dealt with before the auction. There is no cooling off period and you will need to have your finances ready to proceed with the sale. If you don t feel confident, consider seeking assistance from a buyer s agent. Stick to your limit Don t get caught up in a bidding war. You know what the value of the property is and how much you are willing to pay. Be prepared to walk away if bidding exceeds this price and don t feel bad or defeated about missing out, simply continue with your search until you find the right property and most importantly at the right price. UNDERSTAND THE SETTLEMENT PROCESS You re so close to taking possession and collecting the keys to your chosen investment property. Settlement is the official sale process and involves your legal and financial representatives meeting to finalise the sale on your behalf. Your conveyancer/solicitor will handle the paperwork involved but it is vital to understand what this process requires to ensure a smooth handover. The settlement period begins from the day you sign the contract until the final settlement date as outlined in your contract (usually between 30-90 days). This is why it is important to have your loan approved before signing a contract of sale. Final inspection Before settlement you can attend one last inspection of the property to ensure it is being sold to you in the same condition as when the contract was signed. Prior to settlement day your conveyancer/solicitor needs to make sure; any existing mortgage is paid off and caveats are removed. On settlement day your lender will register your mortgage and release the funds to buy the property. Your conveyancer/solicitor is responsible for making sure: Any existing mortgage is paid off caveats are removed registering the transfer of the land and mortgage is registered with State Territory Title s Office. Your conveyancer solicitor should keep you informed throughout the entire process. If you are concerned it doesn t hurt to get in touch and ask for updates, especially in the few days before the final date, to check that everything is in place, on the right track and to resolve any issues as soon as they pop up. 16

APPOINT A PROPERTY MANAGER Now that you are a landlord there are obligations that apply to renting a property that you need to be aware of. To ensure you are sticking to these legal obligations it s best to appoint a property manager. This means you will have a licensed professional looking after the day-to-day management of your investment property. The property manager acts on your behalf and their role includes; finding reliable tenants, ensuring the property is well maintained, responding promptly to maintenance requests, conducting inspections, collecting rent and handling any complaints or disagreements that may arise with tenants. Who you hand this crucial role over to is important. Shop around and always check that the property manager you choose is fully licensed. You can appoint a real estate agent or residential letting agent to manage your rental property. Always ask to see an agent s license before appointing them as your property manager. 17

MAKE YOUR PROPERTY APPEALING TO TENANTS To attract tenants your investment property must be clean, tidy and well maintained. Whether the property is in need of major renovations or a few minor improvements, any changes should add to the value of the home or boost its rental value. Set a budget for these improvements and stick to it. Here are some tips to enhance the aesthetic appearance of your property: Update the kitchens and bathrooms Unless the property is new or near new, chances are these heavily used areas of the home are suffering from wear and tear. Make small changes like adding new fixtures, updating appliances, re-grouting tiles or installing new flooring. Paint It s amazing how a fresh coat of paint or change of colour schemes can add instant appeal. New blinds and curtains Get rid of daggy, stained, old curtains and look at installing new trimmings to give the place an affordable lift. Landscaping and garden maintenance Weeds and overgrown gardens are not a good look. The gardens and lawns are one of the first things you see and fixing these issues will increase your street appeal. Shop around for the right tradesmen and cheaper materials Get quotes from a few different tradesmen to make sure the job is done at the right price. Where possible source materials yourself, either online, through wholesalers to cut costs. 18

ORGANISE INSURANCE PROTECT YOURSELF & YOUR INVESTMENT You ve poured money into your investment property so it s in your best interest to get the right insurance, in case the unexpected occurs. House and content and landlord insurance should be taken out as soon as you are legally responsible for the asset. In some cases, this may be at signing of the contract, so seek advice at your earliest convenience. Mortgage insurance may be necessary if you are under a certain level of deposit. Your mortgage broker and bank will discuss this with you. Life insurance can be used to protect your investment in a number of ways. For example, many investments are reliant on multiple incomes to service the applicable debt. If one of those incomes was to cease, either temporarily or permanently, it could force the sale of the property- undoing all of your hard work. Life insurance in the form of death, total and permanent disability, critical illness and income protection can provide financial assistance to ensure the investment strategy that led to the purchase of the property is not affected and can be maintained. For the right cover to suit your individual circumstances book an appointment with your financial planner. TAKE THE LEAP It s time to take action. Now that you ve educated yourself on property investment and know what s involved, developed goals and strategy with your financial planner and accountant and know what the buying process involves and how to handle it from an investment perspective- you are ready to make your property investment dreams a reality. There s no need to make excuses like, the current market isn t quite right or what if interest rates rise? Waiting for perfect conditions and delaying your plans may only leave you with regrets later down the track. To ensure you ve got all of the basic keys to success covered, keep the following checklist on hand and take it one step at a time, ticking off each box as you go. 19

BUYING AN INVESTMENT PROPERTY MADE SIMPLE Checklist Think like a successful property investor (see pages 2-3) Learn from success stories. Spend time researching and reading tips from successful property investors who share their stories and secrets online or in print publications. Assemble your professional investment team (see page 4) Who will you call on and trust to provide you with specialised, expert advice, provide guidance, support and assist you with making the best decisions? Do your research and shop around for qualified professionals who will always put your best interests first. Contact Phone number/email address Financial Adviser Accountant Mortgage Broker Buyer s Agent Conveyancer/solicitor Property Manager Outline investment goals and strategy (see page 5) o Book an appointment with your financial adviser. o Write down your responses to the following and take this with you to your initial meeting: Why do you want to acquire an investment property? What are you hoping to achieve financially through property investment? Maximise tax deductions (see page 6) o Book an appointment with your accountant. o Understand what tax deductions you are able to claim as a property investor. o Your accountant should make sure you make the most of potential tax benefits available to you and that your strategies use the tax advantages efficiently. Assess your finances (see page7) Does your current financial situation allow you to invest in property? o How much can you borrow? o Are you aware of the costs involved in buying an investment property? o Have I discussed these investment plans with a financial planner? Is property in super a strategy that is right for you? (See page 8) o Use the Otium Group calculator to see if you qualify o Do you understand; what is a SMSF? What s involved and how to buy an investment property in super? How it can be made simple. 20

Use a mortgage broker to get the best home loan (See page 8) Research where to buy (See page 9) o Ideal locations shows promising signs of growth over time, a secure rental market and affordability. o List potential suburbs o For each suburb listed find out more. Research information on; population growth, vacancy rate, employment, lifestyle and access to amenities, rental history, infrastructure and any planned developments. o Talk to as many property experts as possible to gather their views and opinions on hotspots. Be aware of spruikers (See page 11) Keep an eye out for; promises of get rich quick schemes, high pressure sales tactics and property sellers who want to control your whole buying process. Research what to buy (see page 12) What types of property are in high rental demand in the location you are looking to invest in? What type of property best suits this demographic? House, townhouse, unit, apartments? How many bedrooms? What nearby facilities and amenities will make this property attractive to this demographic? Do the legwork (see page 13) o Inspect the properties you are interested in buying o List any major structural flaws o Keep your emotions in check. Treat your property investments like a business and don t get emotionally attached to the cosmetic appeal of a property. Appoint a licensed conveyancer/solicitor (see page 14) o Shop around, ask for referrals, check their accreditations and licensing and ask what their fees are upfront. Know how to negotiate price and be prepared if buying at auction ( see pages 16-17) o Ask the agent why the property is up for sale, know what the property is worth and make an offer. o If attending an auction have your finances in order, make sure you are happy with the contract and its terms, stick to your limit and don t get caught up in a bidding war. Settlement (see page 16) o Confirm the final settlement date o Attend the final inspection o Keep in contact with your conveyancer/solicitor up until final settlement date to ensure everything is in place. Appoint a property manager (see page 17) o Shop around and always check the providers licensing o Make your property appealing to tenants o Do improvements need to be made to the property o What is your budget for these improvements o Speak with your accountant to see if these improvements are tax deductible o Shop around for the right tradesmen and cheaper materials to complete the work needed Insurance: Protect yourself and your investment (see page 19) o House and content and landlord insurance are in place. o Will you require mortgage insurance? o Do you have the right life insurances in place? o Discuss with your financial adviser. 21

Otium Group Phone: 1300 468 486 Location: Suite 6/22 Ocean Street Maroochydore Q 4558 Email: info@otiumgroup.com.au Website: otiumgroup.com.au Disclaimer: Liability limited by a scheme approved under Professional Standards Legislation. Otium Advice Pty Ltd, ACN 160 427 592, is an Authorised Representative of AIW Dealer Services Pty Ltd, AFSL 414256, ACN 153 322 420, an Australian Financial Services Licensee with its registered office at Level 1, 155 Baroona Road Rosalie Qld 4064 This communication contains information which is private and confidential. If you are not the intended recipient of this communication please delete and destroy all copies and telephone Otium Group on 07 5443 7364 immediately. If you are the intended recipient of this communication you should not copy, disclose or distribute this communication without authority of Otium Group. Except as required at law, Otium Group does not represent, warranty and /or guarantee the integrity of this communication has been maintained or the communication is free of errors, virus, interception or interference.