HOW DO YOU FIND GOOD PROPERTY DEALS?
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Articles by Salesh Chand.
It's human nature to want a good deal, and that applies to buying property as much as anything else. Finding good property deals can have a significant influence on your wealth creation, whether you're buying your own home or an investment.
There are several strategies you can use to source them.
Price is just one factor
It's important to understand that price is just one part of the equation in identifying a good deal. You also need to investigate the physical aspect of any potential purchase, and if you are after an investment property, you'll need to consider factors such as rental yield and capital growth as well. A bargain price will not turn out to be such a bargain if the house has major problems that are going to cost a fortune to fix, or if the rent you can achieve is nowhere near what you need to make the numbers work. (You can learn more about property investment at GRA's Property School course.)
So how do you find the good deals?
Research areas
Firstly, you need to determine the area you want to buy in. This will be influenced by how much you have to spend and the type of property you're looking for. Investment properties with high rental yields will be found in different areas to properties that are excellent capital growth prospects; apartments will often be found in different locations to older character homes.
Now, spend time doing some research and getting to know the prices in that area. If you can become an expert in property values, you'll easily be able to spot the good deals when they come up. Look at comparable sales, talk to real estate agents about what properties are selling for, and attend some auctions as a spectator.
Use real estate agents
Once you have determined the area, start making friends with real estate agents. Find one in every real estate company that operates in the area. Win their confidence by showing them you are a determined, serious buyer and you're not there to waste their time.
Take the agent out for coffee, lunch or dinner. Keep in touch regularly. Once you are in their good books, they will always show you the best deals first - and chances are that you will get to hear about a property before anyone else knows even knows it's for sale. This can result in you buying a good property at the right price because you don't have to compete with other buyers.
Auctions
Do not give up going to auctions - the chances are you will strike a deal when not expected. Recently, I've heard that buyers like to negotiate prices directly instead of going to auctions. This is a sign that buyers are not interested in auctions, so if you turn up on the day you may have less competition and be able to secure the property for a good price.
Private Sellers
You need to be quick if you are aware of any property for sale privately that looks like a good deal. It's likely the seller is not up to speed with the market prices, and you can get a bargain if you snap it up fast. The longer the property stays on the market, the more educated the seller is likely to get, and the more he or she will want for their property.
And never make the mistake of telling private sellers what properties are selling for around the corner (unless they are absolute bargains and will lower the seller's sights even further, of course).
Teamwork
Buying the right properties is not hard work, but you need to be determined and know what you are after. To ensure your success, it is extremely important to get your professional team behind you. In particular, your accountant can help confirm whether a deal is, in fact, a good one. As well as your accountant and real estate agent(s), make friends with your banker and lawyer, as these are the people who will ensure the property transactions are processed correctly and on time.
Salesh Chand
Partner and Director of Business Services
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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