10 Questions to ask before buying an investment property

January 25, 2022
| Nathan Pitt

What to Look for When Buying an Investment Property

Investment properties can be a great way to create passive income and given the current economic climate, rental properties are predicted to be a secure investment. If you’re in the market to invest in property then you’re going to want to tune in. There are many things to consider when buying an investment property in Queensland, Australia. Here Coronis Finance address the most important 10 questions to ask before buying an investment property.

1. How much can I borrow for an investment property?

You’ll need to know how much you can spend before you start shopping around. Speak to your investment mortgage broker about how much a lender will be willing to loan you that way you’ll know which areas and price range to start looking in.

2. How much deposit do I need for an investment property?

Generally, for buying property as an investment, you’ll want about a 20 per cent deposit before purchasing. This can be quite a large sum. But remember may have the ability to use the equity in any of your current properties to help contribute to this figure. You may need to order a valuation before you can work out the exact figure you’ll need.

3. What type of investment property should I buy?

Are you going to purchase a unit? If so you’ll need to factor in the extra costs involved with strata fees or body corporate fees as these can interfere with your cash flow down the track. If you’re buying a house then ask how much rates and utilities are in the area.

4. Where will you buy an investment property?

Are you buying local or interstate? Queensland has recently been hit with many interstate investors buying properties sight unseen. We recommend researching the area you want to purchase in before going ahead. Think about the growth potential of the area you want to buy in too.

5. Will you use a mortgage broker or go directly to a lender?

We recommend a mortgage broker as they have access to many different types of investment property loans from a range of lenders so you’ll know you are getting access to the best deals available. The best part is they are generally fee-free and receive their commission from the banks, not you.

6. Do I go with a lawyer or conveyancer?

This generally comes down to how straight forward your purchase is. Conveyancers can be cheaper because they’re only focused on property law. However because of this narrow focus if other issues come up you’ll need to engage a property lawyer to assist. So it might be worth exploring engaging a property lawyer from the get-go.

7. Should I research vacancy rates?

Vacancy rates can be a good indication that your property will be rented, but it’s not a guarantee. Is your property in a student-centric area where it could be empty when universities are on holidays? Not having your property rented for the entire year can seriously impact your cash flow.

8. Do you want to renovate?

Are you going to be an active or passive investor? Being an active investor might mean you’ll be renovating to improve your chances of your property growing in value. Or perhaps you want to subdivide the land? If passive is more your scene that’s okay too, sit back and let your portfolio grow in time.

9. Can you afford the mortgage repayments?

Regardless of whether your property is going to be negatively or positively geared, you need to think about what would happen if the property was not rented for a long period of time? Could you afford the repayments on it if things don’t go 100 per cent to plan? It’s a good idea to have a backup plan.

10. How do I get a good interest rate for a mortgage?

With interest rates are historic lows around Australia, now is a great time to secure the lowest interest rate on an investment property. Speak to one of the best investment mortgage brokers in Queensland about what interest rates are available to you as an investor.

These were the top 10 questions to ask before buying an investment property, hope these most important questions will help you in making your final decision when buying a second property as an investment.

Nathan Pitt
Article by Nathan Pitt
In late 2017, after five years as a Graphic Designer, Nathan joined Coronis as a Design & Marketing Co-ordinator for Coronis’ allied businesses, providing a one-stop-shop for both marketing & design and allowing the marketing team to adapt and flex…
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