Real Estate Guide: How to Research and Find Properties
1. Identify what you want
So you’re in the market to buy a property. The very first thing you need to do is sit down and take a moment to think about your end goal. What do you want to achieve by buying this property? Are you looking for a comfortable home for you and your family to live in? Do you want to use it as a springboard to invest in multiple properties? Are you hoping to rent it out to tenants? Or are you planning to renovate and resell?
You need to identify your objectives and develop a strategy. Work out how much you have to spend, the general location you’d like to buy in (e.g. country, city, coast, etc), and whether you’re after a house or a unit. If you’re planning to buy a property as an investment, rather than your home, you also need to work out if you’re buying primarily for capital gains or for cash flow. If you’re a first-time investor, it might be wise to consider buying for capital gains, which will help you build equity and buy additional properties down the track.
Once you’ve outlined your investment strategy, you can work out how this particular purchase will fit into the plan.
Featured First Home Buyers Home Loan
State Custodians Mortgage Company Standard Variable Offset Loan is a great option for your first home or your first investment property. A 100% offset arrangement is also available.
- Interest Rate of 6.02%
- Comparison Rate of 6.23%
- Application Fee of $0
- Maximum LVR With LMI: 95%
- Minimum Borrowing: $150,000
- Maximum Borrowing: $1,000,000
2. Choose a location
The old adage ‘location, location, location’ is one worth listening to. While of course a number of different factors come into play when achieving property investment success, location can have a very big impact.
While in the past many investors often only looked as far as the boundaries of their own suburb, with the help of buyer’s agents and the internet, buyers these days can consider purchasing property in another state. Provided you have the ability to learn more about the area and keep an eye on the property’s progress, there’s no reason why you can’t invest interstate when you see the right opportunity.
First, you need to complete your suburb due diligence by hunting down areas that show great promise for capital growth. You can consult websites like RP Data (www.rpdata.com) and Residex (www.residex.com.au) for recent home sales data. Also look at projected capital growth figures for the next five and 10 years, and historical records. If you’re planning to rent, vacancy rates and rental yields are worth considering too.
Also check out the predicted population growth for the suburb and the percentage of renters in the area. You can find these statistics by consulting the Australian Bureau of Statistics’ (ABS) Census data at (www.abs.gov.au).
Consider the facilities and infrastructure the area has at the moment – such as shopping centres, schools and train stations – and find out what projects are planned for the future. Check out the federal government’s website at www.infrastructureaustralia.gov.au for links to various state and territory planning departments. Work out if the planned projects are in fact a pro or a con. For example, tenants might be put off by loud and disruptive construction, and a new building that blocks your view, or they might be drawn to improved shopping facilities and better rail connections.
You can also chat to local real estate agents to get a feel for the market and any particular streets that you should look for or avoid. They may also know if there’s currently an oversupply or undersupply of any kind of dwelling. Even hop on Google Earth to have a look at your chosen area and identify the desirable streets close to the beach or shops, etc.
Once you’ve chosen your desirable suburbs, assess the demographics in the area to work out what buyers or renters may want. Put simply, become an expert in the area in which you want to buy. Once again, ABS Census data is a good place to start. For example, in an inner-city area full of young professionals, features like proximity to public transport and entertainment may be important, whereas in a family-oriented suburb, second bathrooms, more outdoor space and entertaining areas might be key.
Next, draw up a list of all of your needs and wants. Make a list of strict buying criteria that you definitely want in the property, such as a minimum of two bedrooms or a large kitchen, and a secondary list of all the negotiable extras, like a deck or a courtyard. Make sure the list reflects the wishes of your tenants or buyers and not your own personal taste! Also consider whether you’re after a house or a unit and how many bedrooms would be ideal.
Snapshot: Factors to consider
- Population growth
- Crime rates
- Demographics
- Transport connections(roads and public transport)
- Infrastructure (current and planned)
- Average annual capital growth
- Rental yields
3. Complete property due diligence
Once you’ve pinpointed several suburbs you’re keen on, it’s time to start looking for properties. Be prepared to give up your Saturdays and attend at least 50 to 100 open inspections over the coming months. Scour the real estate lists, make friends with agents and keep up to date on new listings.
Take notes on the pros and cons after you see each property, matching each dwelling’s features with those on your buying criteria. Also ensure that the property would be in line with your chosen investment strategy. Drive past the property at various times over the week and weekend – you may discover that it gets very noisy on a Saturday night or that it’s under a flight path.
Once you’ve found a property you’re interested in, ask your lawyer to look over the contract, possibly amend certain terms and conditions, such as the cooling-off period, etc. Always check exactly what’s included with the property, like curtains or a parking space in a unit block.
Conduct council searches to find out about zoning, rates and contamination issues. Remember to also carry out a legal search and a building and pest inspection for a house or a strata report for a unit. If you’re planning to renovate, ask the council for any information or guidelines on the property’s zoning classification, and complete a development application (DA) check, heritage listing search and services plan check.
If you’re looking at a unit, it’s also worth finding out the balance of the sinking fund (which is used to pay for general building maintenance) and what projects are planned for the near future. You might discover that the building has concrete cancer but the fund’s balance won’t cover the cost of repairs. Also make sure that the unit’s not saturated with investors, but rather has a good mix of owner-occupiers and investors. The value of real estate is often in the scarcity factor, so if there’s a huge building full of identical units being rented out at the same time, it may decrease your unit’s rental appeal.
Assess the median value of similar properties nearby to work out if you’re getting a good deal. If you’re choosing to rent out the property, also check vacancy rates and rental returns for similar properties in the area through websites like www.realestate.com.au and www.domain.com.au.
Once you’ve completed your property due diligence, it’s time to take the next step and acquire the property. Always try to negotiate the purchase price, even just a little. If it’s your first purchase you may like to enlist the help of an independent valuer to give you an idea of the property’s real worth and a buyer’s agent to conduct the negotiating for you.
Once your offer is accepted, you can exchange contracts, have your finance approved and celebrate!
Related posts:
- Buying Investment Properties.
- Real Estate Terms
- Real Estate in Tasmania
- Darwin Real Estate Market
- Real Estate Property Value
- Real Estate in South Australia
- How to Find a Positive Cash Flow Property
- Real Estate in Victoria
- Effective Property Investment Strategies
- Real Estate in Queensland
Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 5.85% | 6.21% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 Bankwest Online Home Loan | A low interest rate home loan with a $0 application fee and ongoing maintenance fees. This offer is exclusively available by applying online. | 5.97% | 5.97% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded Mortgage of the Year 2012 – this multi-award winner features 100% offset and a loyalty 0.25% rate drop after 5 years. | 6.02% | 6.23% | $0 / $345 | 95% | $150,000 / $1,000,000 |
|
 Illawarra Home Loans Bank Beater Home Loan | A low variable rate, beaten down even further by 0.05% p.a. after 5 years. | 6.07% | 6.35% | $0 / $345 | 90% | $250,000 / $1,000,000 |
|
Ask A Question