20 Questions

Margaret Lomas has simplified her “20 must-ask questions” before you buy an investment property saying it’s essential that you buy with your head and not your heart.

Margaret Lomas is the best-selling author of 8 property investment books, including titles such as ’20 Must Ask Questions for Every Property Investor’. She is the Founder of Destiny Financial Solutions and the host of two of highly recommended Property Investing TV shows.

In addition to be the Founder and Director of Destiny Financial Solutions, Margaret is a board member for the Property Investment Professionals of Australia (PIPA).

1. What is the cash flow of this property? Have I considered all costs, and can I afford to support it if it is negative?
2. What is the vacancy rate of the area?
3. What improvements are being planned for the area? Not all are positive; not many people want to live near a garbage tip or major entertainment venue.
4. What is the population growth? Nil or negative growth is usually not a good sign.
5. What is the competition? Look at approved development applications.
6. Is the property tenant-friendly? Forget fancy fixtures and fittings that will be costly to repair and replace.
7. What condition is the property in? Always pay for a building inspection and remember it’s tax deductible.
8. Does it have furniture? This is a must for a tourism property.
9. Is there a body corporate? If there is, carry out a body corporate search.
10. Is there a rental guarantee? Remember, a guarantee is only a promise which has no regulatory backing.
11. What is the current property management arrangement? What does it cost? Does it work well?
12. Is there a leaseback? Even though an operator is your tenant you need to check them out just like any other.
13. In the case of a new or off-the-plan property, who are the developers?
14. Is there a dual purpose, if this is a niche market (purpose-built) property?
15. What is the land availability in the area? Scarcity will lead to higher prices.
16. Is it close to a large city? Make sure it’s easy to get to the city by both private and public transport.
17. How old is the property? Older properties have less deprecation benefits.
18. Is the property at market value? Research recent sales.
19. Is the town you are considering based on just one industry? Avoid it.
20. Are you being commercial in your approach?

Key Consideration:

Australia is the world’s sixth largest country (7692024 square kilometres),after Russia, Canada, China, the USA, and Brazil. In addition to the mainland, Australia is surrounded by many thousands of small fringing islands and numerous larger ones, which, overall, amount to an area half the size of Tasmania (68 401 square Kilometres).

Due to its large territorial extension, statutory laws and market diversity, most prudent buyers and investors both local and from overseas engages independent Buyer Advocates or Buyer Agents to conduct in-depth research and due diligence to allow an implementation of better purchasing strategy, investment structuring and tax minimisation.

* Calculations on Australia’s area are based on data explained in Geoscience Australia’s GEODATA Coast 100K 2004 page.

Link: http://www.ga.gov.au/scientific-topics/national-location-information/dimensions/area-of-australia-states-and-territories