Buying Residential Property
Buying residential property can be an emotional experience, whether it’s a residence in which you intend to live or an investment. It is crucial, however, that any investment purchase decision you make is made with a clear, objective and unemotional mind.
Important considerations to keep in mind when buying a residential property investment include:
- The fair and reasonable market value for the property
- How you will pay for the purchase
- The amount you will borrow, the interest rate and fees that will be charged and how you will service your debt
- The potential income your investment is generating currently and in the future
- Rental conditions in the area in which your investment property is located
- Whether the property is positively or negatively geared
- Current renovations needed and future upkeep costs
All of these considerations are important for a person looking at investing in residential real estate. In the purchase of any property there are a range of matters to consider so this list is made up of common considerations that I consider to be relevant when people make such investment.
From the Case Files
An example of this type of investment was a client who enjoyed large profits in their successful accounting practice that had a number of different businesses and turned over significant revenue of over $5 million per year. The accountant knew that he did not want to work as an accountant forever (even though he was very good at it) and decided to invest his money rather than spending it on consumable items. He bought a large number of residential properties with a moderate rental return so that he was able to generate an income from these properties to be able to pay for his family’s lifestyle. He was then able to choose when he wanted to work as he did not need the money but rather was able to have that freedom because he was disciplined in his Investments.
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