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How do I research correctly before I buy?

Discussion in 'Real Estate' started by bec0203, 6th Jan, 2009.

  1. bec0203

    bec0203 New Member

    Joined:
    6th Jan, 2009
    Posts:
    4
    Location:
    Paddington, Sydney
    Hi,

    I am looking for some practical information on how best to conduct research when buying my first property.

    I have given myself five months to get organised and buy. I am eligible for the FHBG. The property will be used as my PPOR for a portion of the first year in order to meet FHBG criteria. After that I am looking to rent it out and live somewhere else for less. Obviously I want to purchase well the first time in order to build equity and continue buying more properties over time.

    My question is - what are the first steps to take when researching areas? I am not so worries about actually gathering the data. I am worried about being able to interpret it correctly. What I think looks like a good buy may not be to a seasoned investor. Any tips?

    By the time you buy your 5th property does it get any less stressful???

    Thanks.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    A good place to start is by reading as much as you can. There are a lot of good books around which explain how to make money from real estate investing - anything by Jan Somers is a great place to start (there have been others discussed on this forum as well).

    There are lots of different ways of analysing a deal. Try not to get overwhelmed by it all - you need to find a strategy that you are comfortable with and makes sense to you.

    Here's one suggestion on how to value a property based on "Rental Reality": http://www.invested.com.au/75/rental-reality-3104/ (this is just one approach - there are plenty of others).

    I suggest you pick an area where you think there is likely to be good sustained growth over the long term, and a good demand for tenants (eg close to services, schools, etc) ... and spend a lot of time researching it. Look at past sales, go visit open inspections, auctions, get a feel for the area to the point where you are pretty comfortable knowing what price a place it likely to sell for. That will give you a good basis for picking value when you are ready to start making offers.
     
  3. islandgirl

    islandgirl Well-Known Member

    Joined:
    18th Sep, 2006
    Posts:
    118
    Location:
    Middle of beautiful Moreton Bay, Qld
    Once you select an area or street you can do research on how much people have paid for the properties using Agent and Private Real Estate, Free Sold Property Information - onthehouse.com.au. This site gives you free data on actual house prices paid (as opposed to the lies the real estate agent told you). Go to open houses and check out what is being sold and what it looks like.

    By concentrating on one or a few areas you should be able to build up a really good feel for what things are worth.
     
  4. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi Bec

    May I humbly suggest you read a couple of my articles on this site (click Articles and they're in the real estate section) which you may find useful?
    The one on Due Diligence is especially appropriate for you, but try not to get bogged down by information- it can end up causing analysis paralysis :)

    Budget is your first and most important criteria. Once you have that sorted, and your likely affordable cashflow situation (be realistic with all costs) you'll narrow your choices down to a no. of suburbs/towns.
    Best of luck with it all and happy reading!
     
  5. bec0203

    bec0203 New Member

    Joined:
    6th Jan, 2009
    Posts:
    4
    Location:
    Paddington, Sydney
    Thanks for the advice - I will be reading everything I can as I have already picked up a few tips.

    I only discovered this site on Monday and have been impressed with the straight forward approach all contributors have. Keep up the good work everyone - much appreciated.