Tips for first-time property investors


Many questions may come to mind before taking the leap of buying a property. Despite the change that is happening around us, one thing remains the same and that is that property is still one of the safest and most reliable investment decisions.

So, before you start on the exciting journey of buying a property, here are a few tips on how to invest as a first-time property investor.

The right spot for you

The right location is so important when looking at investing in property. Do your research and find out what areas suit your needs. Look for school districts, as well as walking distances to amenities such as shops and restaurants.

A good way of seeing what the potential of a certain area has is by looking at available rentals and sales, as well as how long these properties have been on the market. This will give you a good indication as to what to expect on your investment return.

Also always look at the current crime rates in your top areas. Not only is it essential that you feel secure that your property will be safe but also for your future tenants.

Prepare for the deposit

Most buying property will need to take out a loan, therefore a deposit will be needed. Bank loans are very reliant on job status and credit score.

Additionally, if you have prior savings (approximately 10% – 15% of the selling price) the chances of receiving a home loan increases. This is also beneficial as your monthly repayments will be less and therefore interest rates will be reduced.

Understand transfer fees

As a first-time homeowner there are several hidden costs that you may be unaware of. These hidden costs come in the form of transfer duties as well as conveyancing costs.

Transfer duties are payable to the government in the form of tax. This cost is over and above the selling price of your investment.

Similarly, conveyancing costs are also paid in addition to the selling price and these costs include lawyer fees and bond registration.

View your property

Before purchasing a property, go and inspect your possible investment. Make sure everything that is advertised is there and that everything works adequately. Look if it’s in good condition and that there are not too many repairs and renovations needed, as they will only add to your cost.

Ask the questions

It may be wise to ask your estate agent why the previous owners are wanting to sell. This can give you good insight as to what the future holds for your investment. Ask about other rentals in the neighborhood and what rates they are going for, so you can estimate what your return on your property will be.

Prepare documentation

When applying to purchase a property there is a large amount of paperwork is required. Make sure you have certified and up-to-date identification documents as well as marriage certificates and prenuptial agreements. Past pay slips that date back a minimum of 3 months as well as bank statements are also required so that the seller can see if you can afford the investment.

Putting in an offer

When you have found a property you like and want to invest in, you will need to put in an offer. If this offer is accepted by the seller, an offer to purchase (OTP) will be drawn up. An OTP is a formal document that legally binds you to purchase the property.

The property chain

Once your OTP has been submitted, you may enter a property chain. Simply put, a chain refers to the process of buying and selling a property where a sequence of property transactions are linked. Each purchase is reliant on the other where each buyer and seller is represented as a link in the property chain.

For example, the seller of the house you are interested in may have the condition that they will only sell if an offer on the property they want to buy is accepted. This process may have multiple parties involved and all purchases are reliant on the other.

Once all links in the chain are happy, the sale can finally go through. This is a lengthy process and may take up to 12 weeks.

Looking for the ideal property investment is exciting, but the process can also lead to sleepless nights. By following these tips, you can make your journey of investing in a property enjoyable and straightforward. Happy house hunting!

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