The 11 Best Tips For Buying Your First Investment Property (Ep49)


You’ve decided to go ahead and try and purchase
your first investment property, firstly let me just say a massive congratulations to you,
purchasing property can be a great step towards securing your financial future and creating
financial freedom for yourself and your family, today I’m going to talk about the eleven tips
that I have for buying your first investment property.
Hi, I’m Ryan Mclean and I’m from positivecashflowaustralia.co.au where we help people like yourself find and
invest in positive cash flow properties, go ahead and check us out and we’ve got a free
eBook showing you the 12 places where you can find positive cash flow properties in
Australia. You can get that by going to positivecashflowaustralia.com.au
forwards slash free, the short link is pca.im forward slash free.
What are my 11 tips for buying your first investment property?
Tip number one is to look at 100 properties, that’s right, what most investors will do
is they will go out maybe look at two maybe three properties in their local area and then
they’ll purchase one, they’re probably going to pay more than what is actually worth, by
looking at multiple investment properties in multiple areas you can get a better understanding
of each area, better understanding of what properties actually worth and you can ensure
that you buy a property that is going to move you towards your financial goals not something
that you’re going to pay too much money for. Many famous and successful investors use the
100, 10, three one rule what that means is that they look at 100 properties and of those
100 they might make offers on just 10 of those properties. Of those 10 they might have three
offers accepted and of those three offers accepted they might actually go ahead and
purchase one property, they are looking at 100 properties just to purchase one.
100 sounds like a lot of properties but with the internet is actually much easier to look
at 100 properties to analyze 100 than it used to be in the past, to make sure you’re looking
at a lot of properties before you go ahead and buy.
Tip number two is to research the area, just because you live in an area doesn’t mean you
know what the property market is like and doesn’t mean you know how that going to perform
in the future, if you are buying out of the area then obviously it’s going to be very
important to do your research as well. Research is so important because it’s important
to understand how the area is going to perform both in rental returns and in capital growth
you know that you are buying a solid investment that I going to deliver on your financial
goals. I recommend a tool called ripe house which
you can get by going to pca.im forward slash ripe and that would direct you to ripe house,
you can check that tool they’ve a free trial that allows you to look in an area, look at
where the hotspots are, look at where the blue cheap properties are, look at where the
government housing is and they’ve a bunch of great features out of there.
I do suggest that you use ripe house when doing your research, I also suggest that you
do more research by looking at the purchase price of properties gone, comparing other
previously sold properties in the area and just going to more detail in the area before
you go ahead and buy. If you want more details on how to research
an area because that’s beyond the scope of this video then I have a full module dedicated
to it in at positivecashflowacademy.com.au you can check that out and become an expert
in researching. Tip number three is to don’t always believe
the real estate agents, just because a real estate agent says there’s another offer on
the table doesn’t necessarily mean that there’s another offer on the table. Just because the
real estate agent says that this is a great investment property doesn’t mean that is going
to be a great investment property. Always do your own research and where possible
get outside opinions on the property, if the real estate manager whose selling the property
advices you that this property is going to rent for 360 per week, well maybe it’s a good
idea to go to another real estate manager and say I’m looking just considering purchasing
this investment property and I may want to rent it out through you guys, would you be
able to give me an evaluation of the rental income for this property.
In that way you are getting a party you evaluate it whose not involved in the selling of the
property and it’s not going to get a commission on the sale of that property. Don’t always
believe what the real estate agent say they are very helpful but sometimes all sales reps
can stretch the truth just a little bit. Tip number four is convincers versus solicitors
which one would you use, I suggest you look into both depending on the property if it’s
a more complex transaction if there’s more you need to look into that you need to do
then the solicitor might be a better option for you, if it’s a very simple transaction
then nothing is going to go wrong then the convincer is going to be cheaper than the
solicitor then maybe able to do the same job. When I talk to convincers and I say well what’s
the difference between you and the solicitor then they basically say to me if things get
complicated and things get messy then we are restricted at what we can do whereas the solicitor
can do everything, but they also say that if it does get complicated if it does get
messy we can just hand you over to a solicitor and then they can deal with it from there.
Look at the difference between convincers and solicitors because you can save yourself
a couple of grand going with the convincer instead of the solicitor.
Tip number five is to get a building and pest inspection done, still amazes me how many
new investors go out purchase a property and be without any building or pest inspection
only to find out that is termite ridden or its got issues with the foundation and or
something that is really expensive and structural to fix.
Paying for a building inspection or pest inspection which I’ve created a video about the cost
of those but you are looking around probably three to five hundred dollars apiece if you
get that done then you can be assured that the property is up to you to your standard
and doesn’t have any major issues that are going to cost you an arm and a leg down the
crack. Tip number six is not to get emotional, what
happens when we go out and purchase our first investment property most of the time we are
going to get emotional, I love this property I love the way it looks, I love the feel,
I love the wallpaper or the carpet or the straight that it seems or the tree that’s
in the backyard and by getting emotional this leads to go ahead and pay more for the property
than we should have. If we are not thinking in financial terms
we’re just thinking in emotional terms then we will often make poor financial decisions
because we haven’t assessed it financially, our emotions are driving us to make that decision,
when it’s your home obviously there are some emotion that’s going to be involved there,
when you are buying your first investment property well then you will need to try and
remove emotions from the equation as much as possible look at it as a financial deal
as if you are buying stocks on the stock market trying to take your emotions out of it and
asses it for what it. Tip number seven is to set your investment
goals before you go ahead and invest this is a mistake that many people make is that
they say I want to purchase 10 properties in 10 years or I have a new year’s resolution
to purchase a property this year they say well what do you want to get out of 10 properties
in 10 years or purchasing a property this year.
I want to be rich or I want to make money but by understanding exactly what your financial
goals are then you can actually purchase property for you that will move you towards that. If
you want passive income then it’s not going to make a whole lot of sense for you to go
out and purchase a negatively geared property, if you want fast capital growth then it might
not necessarily be good to purchase in a rural area even though its positively geared and
may not have the predictions of capital growth that you want, understanding what your financial
goals are first you can then go out you can then look at property then you can assess
it based on will this help me achieve if my financial goals or will this actually take
away from what I’m trying to achieve financially. Remember investing in property is a vehicle
for financial success it’s a means to an end it’s not the end itself, you may not just
want purchase that property you want to achieve something financially know what you want to
achieve and try to buy property that will help you to achieve that.
Tip number eight is to talk to the neighbors, go around do some door knocking talk to little
old Mrs. Jones talk to the neighbors and ask them about the street ask them about the neighborhood,
ask them about if there’s anything that they need to know.
Sometimes talking to the neighbors and asking the neighbors is less about the neighbors
actually say and more about who the neighbors are, you can find out a lot about the street
a lot about the suburb by talking to the people who live there and understanding what kind
of people they are, I do suggest you go out and talk to the neighbors go to the local
coffee shop sit there talk to people there who come in, find as much about the area from
the locals as you can. Tip number nine is not to be in a hurry, slow
down, let’s just put the brakes a little bit, when we want to buy our first investment property
we want to buy out we want to go out we want to smash it, we want to purchase it as quickly
as we can but hold your horses property market is not going anywhere there’s always going
to be properties for sale, there’s always going to be great investment deals somewhere
in Australia don’t be in such a rush to purchase an investment property that you pay too much
for a property or that you buy the wrong property at the wrong spot isn’t going to deliver your
financial returns that you want, don’t be in a rush, wait for the right property to
come your way that suits you that you haven’t go out and hunt it, just come and sit on your
lap. You have to go and look for it but wait until
you find the right property and then go ahead and consider investing.
Tip number 10. Do the cash flow analysis, this is something that is that easy to do
and this is why many first home buyers or new property investors don’t actually do the
cash flow analysis, they say well a property is going to cost me x amount and the mortgage
is going to cost me $400 a week. The property rents for $400 a week my costs are going to
be covered because they are the same; you obviously haven’t done the cash flow analysis.
You need to analyze all of the expenses of the property and all of the income including
vacancy rates where the property might seem vacant and you need to assess whether this
is a property that you can afford and again whether it’s going to achieve your financial
goals. Just an idea some of the things to look at
need to look at obviously your mortgage, then you got things like managerial costs you got
council rates, you’ve got maintenance on the property, you’ve got improvements, you’ve
got insurance, there’s many different expenses that you need to pay for that you need to
understand exactly what they are, when they are coming you can predict it moving forward
and you can prepare your finances for it. The last thing you want is to purchase a property
thinking it’s going to be positively cash flowed because you didn’t do the analysis
properly that’s actually costing you hundreds of dollars per week that you cannot afford.
Last tip, tip number 11 is to don’t just negotiate on price, almost everything in property is
negotiable, they are something’s by law that you can negotiate but most people what they
do is that they go in and negotiate on price, I want to get this property for 10 grand cheaper,
or five grand cheaper. Sometimes it’s even a couple grand cheaper,
but they don’t consider negotiating on the terms of the arrangement, what I mean by that
is you can negotiate your things like settlement dates, you can delay settlement dates you
can move them forward you can have all the access to the property you can put down a
small deposit, a bunch of things that you can do that can actually make the deal more
beneficial to you that can help the person selling the property feel like they got the
price that they want. This can be difficult for new investors to
understand but think about it if you are holding maybe a deposit of $100,000 for an extra month
and you getting 6% on that that means you got to earn half a percent on that $100,000
which is worth $500 in that one month, by delaying the property for one month its actually
worth $500 for you and just very rough and very simple example, there are ways in which
you can negotiate a better deal without negotiating on price.
You may want to do both negotiate on price and then negotiate on the terms as well if
you can but do consider the terms and see if you can create a better deal for yourself.
There you have it, there’s my 11 tips for buying your first investment property, we
wanted to look at hundreds of properties and research the area in great detail, I also
said don’t always believe everything the real estate agents say because they may stress
the truth just a little bit, consider convincers and solicitors which ones going to work better
for you, get your building and pest inspections done, avoid getting emotional when purchasing
your property, make sure that you set your investment goals before you start looking,
do some door knocking, go and talk to the neighbors, don’t be in a rush, do the cash
flow analysis can’t stress that one enough and don’t always just negotiate on price.
If you want more videos, audio and articles just like this one you can get them over the
blog, head over to positivecashfloaustralia.co.au and I will see you on the next episode.

42 comments

  • Thanks very helpfull!!!

  • Property Valuation Group

    Great advice! I would also add to conduct your independent valuation to minimise the risk of getting ripped off upfront by investment marketing hype, otherwise you could wear a capital loss and pay interest on a dud investment.

  • Tip 5.1 – get a reputable building and pest inspector.  Tip 5.2 – Go with them to the inspection.

  • please shave 🙂

  • Thanks for the advice. Tried looking up your site, and just a big orange page with a small cut and paste pic.

  • Nice Video

  • Can you please explain again tip #11 because I don't understand the $100 000 deposit example?

  • Clear and concise..

  • CLIFFORD CASTRO

    Awesome vid!

  • Greiguci Wootchie

    Have you just drank hot chocolate?

  • Extended Stay Tucson

    #Greig Sanderson +Amy Thyst My facial hair is so thick even when I shave I have a moustache, so either listen to the podcast or get used to moustachio…property blogger by day, mexican vigilate by night. @Property valuation group

  • Check Stodoys handbook if you want to learn about it much much more.

  • MetroVal Sydney NSW SydneySider Valuers

    Great tips Thanks !

  • Very helpful…and I'm in South Africa!

  • Watch Daniel talking about his buying first investment property 🙂
    https://www.facebook.com/pifinance/posts/1231983380227010

  • Hey, enjoy your channel.

    Thought i might just question tip 4.

    It sounds like you are saying that you can go through a conveyancer and if troubles arise, then you can bring in a solicitor. I feel like that was a little misleading.
    As the reason you employ a solicitor for conveyancing work is to ensure no future problems arise and that the deal goes smoothly, at least on the conveyancing side.
    If you do as you suggest and go with a conveyancer, and save a few dollars. The one time that there are issues it will cost you a substantial amount of money with a solicitor.

    Example if issue arises:

    1) Conveyancer fees $500-$1000, then issue arises Solicitor fees for litigating/negotiating $1000-$5000 (Depending on complexity)

    2 Conveyancing with Solicitor $500-$1500, then if issue arises (of course that won't happen as you hired a solicitor).

    Hope this helps clarify the tip slightly better for costs, for your audience.

  • This is a great vid. Thanks

  • How to know which area is good ?

  • inderjeet singh BRAR

    you are legend mate ..thanks for your advice

  • Enjoyed this video! Awesome for a beginner like me.

  • Tip 1.5…lowball 100 properties 😂

  • When peple tell me "This is a GREAT investment property" i ask why they haven't snatched it up…. once you do that sales rap ends lol

  • Tip 12: Check your spelling least you make yourself a laughing stock by misspelling your industry-related terms like 'conveyancer', which has been written 'conveyencor' (Tip 4: Conveyencors vs Solicitors)!!

  • Hi Ryan,
    Thanks for your great videos on your channel.
    I'm renting atm and only earn 57k/y. I pay $260/w for rent and am single.
    I was thinking buying myself a house to live in but after abit of finincal education I realised it'll be a liability not asset.
    Do you think in my situation, it'll be still wiser to buy my 1st investment property instead.
    My goal to provide enough cashflow in the upcoming years and retire in 9 years time.
    Thanks in advance.

  • What real estate agent would want to work with you again after looking at 100 properties and only purchasing one?

  • Just came across your channel. I am a new real estate agent who wants a clear understanding of investing so I can better serve myself and my clients. You explain things so clearly and straightforward without the rambling! Keep the vids coming! NEW SUBSCRIBER.

  • excellent tips

  • Great advice but you need to ditch that stache.

  • Richard Butler Creagh

    Excellent tips. Thank you for sharing!

    Watch Richard Butler Creagh video about Henley Finance here: https://youtu.be/pRXPlX088zA

  • I bought a $115k investment house in Vegas back in 2015 when I was 21 years old. 25% down in cash, and the renter has been paying my mortgage for the last 3 years. I thought I had wanted a car like everyone else, but I ended up getting an investment house first. Hope this helps some young investors!

    https://www.youtube.com/watch?v=5GIaPnqqjO8

  • Oh! It was good and hlepfull information. tell me you opinion this site: https://www.wegetproperties.com/blog/2018/05/03/how-to-sell-your-house-in-5-days/ you can get more information vist site.

  • Thanks for your advice and i got some information and it is helpful to everyone what is opinion on this website : https://www.wegetproperties.com/blog/2018/05/03/how-to-sell-your-house-in-5-days/ and give me your valuable suggestion .

  • Drew Lemmerick

    great video. saved to favorites. tip 5.1 and 5.2 in the comment below is helpful too

  • Add Value 2 Lives

    Thank You. Nice & Crisp Tips. Appreciate your work.

  • Great tips, thank you for helping us,

  • Very helpful.. Great.

    http://biz.ratebe.com.au/p270035/Valuations-QLD.html?ac=

  • Very Helpful.. thanks for advice

    https://www.localstar.org/valuations-sa

  • I have a tip for you. Shave that peach fuzz mustache.

  • Thanks, I am searching for my first investment property and I can relate to tip #9.

  • Tip #3. Never trust a real estate agent. Especially one who comes across as a slime ball. Tip #5 Definitely get a building and pest inspectio and go with them to inspect. Get a stump and plimning inspector also if buying an older home. Tip #8….this one seems obvious but imo I don't think this always works in your favour. If the neighbour is bat shit crazy they can pretend they are sweet like candy. Then the truth comes out months down the road. I've seen Kill Thy Neighbour on Netflix and neighbours can turn on you. Little sweet nanna one day evil nasty woman the next because your dog peed on her front lawn.

  • pinkorganichorse

    Wonderful advice but I'm in USA.

  • Great work mate. Very useful advice. Keep it up, and thanks

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