Welcome to the latest edition of Eagle Eye Property Insights. This week, Graeme shares insights on buying in a challenging market, managing maintenance costs, and navigating tougher lending conditions.
It seems as though we could be in a buyer’s market for some time. But just because you have the capacity to buy, should you buy? As an investor, it is easy to get caught up in the moment by adding to your portfolio. Some things making it harder, which you may want to consider, include whether prices will fall if supply keeps increasing, how long it will be before you see a capital gain, and whether a better property deal may come along. If you keep waiting, will there be more competition? What about the extra costs with possible vacancies, increased rates, insurance, and maintenance costs? Finally, does purchasing the property get you closer to your goal?
The cost of repairs and maintenance expenses following property purchases can hammer investors at times. What is the best way to manage this? Doing thorough due diligence on the property, including viewing it yourself and getting a builder’s report, is a good starting point. Do not take a real estate agent’s word that the property should be Healthy Homes compliant. Look for a Healthy Homes report and check the invoices if work has had to be done from the inspection report. You could also ask the seller to do any required work as a condition of the sale and purchase agreement. Borrowing extra for the maintenance costs can also be an option if you are happy to do the work.
Extending interest-only terms with your lender is getting harder these days. Generally, servicing will be the issue, as for calculation purposes your loans are spread over a shorter term. If you are coming off higher interest rates, that can be helpful. However, a couple of things to watch out for include your lender needing your latest financial statements and tax returns, and you may incur higher interest rates and principal payments if your loans roll off their interest-only term before you have a decision.
Note: The content provided above is for general information only and does not constitute personalised financial advice. Please consult a licensed financial adviser before making investment or lending decisions.