Hi all,
I have been working on a checklist for property purchases and I thought I would share progress in the interests of open source collaboration...there a probably some good ones already floating around but I found it helpful to make my own. It somehow made sense to break it up into 3 stages. Stage 1 is planning or pre purchase. Stage 2 is the actual buying process. Stage 3 is the ownership phase. I believe systemising all 3 stages a bit should increase our professionalism as investors, and our enjoyment of the process as things will be easier. (for me systems = less stress) The total list is currently between 80-100 steps depending on how you break some of the steps up. I don't mind how many steps it ends up being, just that each one is achievable and make sense. Some of the notes are probably not required but I put them in as they occurred to me. I am happy for people to add/subtract, comment as you wish.
So anyway here are some draft notes for stage 1. I would appreciate any ideas as I am sure there are things missed.
STAGE 1 - PLANNING
I have been working on a checklist for property purchases and I thought I would share progress in the interests of open source collaboration...there a probably some good ones already floating around but I found it helpful to make my own. It somehow made sense to break it up into 3 stages. Stage 1 is planning or pre purchase. Stage 2 is the actual buying process. Stage 3 is the ownership phase. I believe systemising all 3 stages a bit should increase our professionalism as investors, and our enjoyment of the process as things will be easier. (for me systems = less stress) The total list is currently between 80-100 steps depending on how you break some of the steps up. I don't mind how many steps it ends up being, just that each one is achievable and make sense. Some of the notes are probably not required but I put them in as they occurred to me. I am happy for people to add/subtract, comment as you wish.
So anyway here are some draft notes for stage 1. I would appreciate any ideas as I am sure there are things missed.
STAGE 1 - PLANNING
- Decide to take action.
- Set long, medium and short-term goals for wealth creation and property investment.
- Review your finances to confirm your current level of affordability, and that you have enough funds to cover any transaction costs.
- Decide on approximate price range and property type and locations
- Decide on structure for purchasing (own name vs trust vs pty ltd etc)
- Decide on how to obtain finance ? whether through a Mortgage Broker or Bank directly.
- Make an appointment with your chosen Bank Manager or Broker so you have a clear indication of how much you can borrow and what type of home loan is right for you. Remember the smaller your deposit the more cash you can keep as reserve, however this means you borrow more (as a percentage) and you will need to pay Lenders Mortgage Insurance (LMI) for loans over 80%. If it means you can afford more properties this may be a cost worth paying as your capital growth exposure over time can be larger.
- Apply for Pre Approval
- Receive Pre Approval
- Check whether any First Home Buyer or other stamp duty concessions apply in your state or territory.
- Estimate your approximate expenses e.g., legal costs, stamp duty, pest and building inspections, lender?s mortgage insurance and application fees.
- Research the property market. Remember to consider economic drivers, planned infrastructure projects, the law of supply and demand, and the current state of the property cycle in your chosen area.
- Based on the research, confirm more specific property type, locations and price brackets remembering to ensure they are affordable for you.
- Review any selected short list of properties and consider how each property will fit your long, medium and short term goals.
- Set up bank account for your investment property(s) ? subject to the structure you have chosen. You will need your rents to come into it, and your mortgage and any other bills to come out. Its best for this to be separate from your personal living expenses account.
- See STAGE 2 for your next steps.