Today let me share with you the 12 things
I think you need to consider when buying your first investment property Hi. My name’s Tony Law from Your First Four Houses. My channel is all about helping you achieve financial
freedom through property. If this is your first time here, be sure to subscribe to the
channel and click the bell notification icon so you don’t miss out on any of the free content
that I share each week. In today’s video, I wanted to give you the
12 things I think you should be considering when buying that first investment property.
However, I’ve actually gone and put together a 50-plus-point checklist for you, which means
that when you go through this checklist, you just go down the whole checklist just ticking
off one box at a time. It will mean that you won’t miss out on anything really important
when buying that first investment property. If you just wait til the end of the video,
the link’s there. Just click on that, and you can have that for free with my complements.
The first thing I want to say to you is, before you even start looking at properties, you
need to go and get some serious tax advice from a competent tax specialist. Don’t listen
to the people around you. Don’t listen to the advice that they give you, because they
don’t know your sets of circumstances. Go and speak to a competent tax advisor. Lay
down everything in front of him, and he will advise you on the best way for you to buy.
Next, you need to connect with a competent mortgage broker. It needs to be an independent
broker, a broker that’s got access to the whole of the market. Don’t walk into your
local bank, a bank that you’ve been with for 20 years, and say, “Can I speak to the mortgage
specialist?” because that’s not in your best interests. You need to understand what you
can borrow, and you need to get this sorted out early on in the process because getting
the mortgage in place can often be the biggest cause of delay when buying properties.
Next, you need to connect with five fab agents. You need to connect with five established,
competent estate agents. Ideally, walk in and speak to the senior negotiator in each
branch if you can. Understand that these guys get really awesome deals coming thought their
door on a weekly basis, places where you could maybe add some real tangible value, and so
you need to connect with these people and keep that connection going on a regular weekly,
or certainly fortnightly, basis. With that said, just be aware that these are salespeople,
and I don’t mean any disrespect by that. I’ve been a salesperson for 20-plus years. But
they can sometimes put a spin on things that maybe might highlight certain areas and maybe
hide other areas. Common sense, really. Next, you need to go and see 10 properties
a week. By that, I don’t mean looking on Rightmove and looking at 10 properties. I mean you need
to walk through the doors of 10 properties a week. Maybe you should be offering on a
number of those each and every week. There should be a price, a price whereby if you
got it for that price, it’s a no-brainer. You would buy it.
Next, you need to always be on the lookout for places where you can add value. The property
that you’re now looking at, is there a way to add real tangible value? If not, well,
maybe it’s not the right property for you. Can I be honest with you and say that? When
I talk about adding value, by the way, I’m not generally talking about a light makeover.
I’m talking about something we can add some real, substantial, tangible value. It’s not
really related to adding value, but I would also say, within this category, look for places
where you actually got the real potential for some form of capital growth.
Next, on the property that you’ve just seen, you need to do some serious due diligence.
I’ve done videos on this. Just go to my channel and you can search for them there. At a very
basic level, go and knock on the neighbor’s doors. Drop your body posture, be apologetic
or humble in your approach. Just say, “I’m so sorry to bother you, but I’m looking at
buying the property next door, and I know it’s been empty for six, twelve months, whatever.
I wonder if I could be a bit cheeky and ask you a little about it and also the area?”
If you do that, these people will want to help you. They will give you the advice that
you’re looking for. By the way, if this stuff is helping you,
I would love it if you could take a moment just to click on the Like button below. That
would really help me. That would really be absolutely wonderful if you wouldn’t mind
doing that. Next, you need to understand how to calculate
the return on investment on this particular property. Now, if you’re not sure how to do
that, you simply take the annual profit, divide it by the cash that you’re investing in the
deal, multiply it by 100. I did a video that shows you exactly why I think return on investment
is a better measure than yield, although I know I got a bit of flack for that, but I
stand by what I said. I think return on the investment is a better way of evaluating a
deal than yield is. Next, don’t charge in. Don’t be a motivated
buyer. If you have got cash available or you got funding in some form, it’s ever so difficult
not to buy a property. I hesitate to say it, but … because everybody says it … but
don’t let your emotions run away with you when you’re looking at an investment property.
It is an investment property after all. If this one doesn’t pan out, there are other
properties out there. Next, go and get a surveyor from a competent,
established surveying team or individual, rather, or, and again I hesitate to say it,
a competent builder. I have a very, very competent builder, and I put a lot of faith in his judgement
. Sometimes, in my experience, a competent builder will kind of tell it as it is. Does
that make sense? He won’t, maybe, put a whole lot of disclaimers in his report. He will
just tell you exactly what he thinks there and then.
If there is an issue, I guess you’ve got three ways you can move forward. You could kind
of swallow it, so that there’s some costs involved in remedying an issue. You could
kind of swallow those costs. You could pass those costs on to the seller or, and this
is the difficult one, you could simply walk away from the property. You shouldn’t be afraid
to do that, because other properties will come up. Don’t forget, this isn’t somewhere
you’re going to live. This is an investment property, so you should be prepared to walk
away. I need you to think about your exit strategy before you buy this property. What
are you going to do? You going to set it on? You going to keep it for the long-term? If
you’re keeping it for the long-term, what are you going to do about it? Think about
this and have a clear exit strategy, and ideally two, even before you actually exchange on
that deal. Next, and this is really important, doughnuts.
If you do a deal which has been passed to you via an estate agent, you’ve got to go
out of your way to make sure that agent is fully aware that you are thankful. To be frank,
you’re thankful that he passed that deal or put the deal in front of you because, be assured,
if it’s a really good deal, there’s a lot of people he could put that deal in front
of. The best way to do that is to walk in with a 12-pack of Dunkin Donuts. Thank you,
Peter, for that recommendation, by the way, a good friend of mine, established letting
agent, or at least he was. It’s a great tip. You got to try that. It really works.
The last thing I want to share with you is I know we’re talking about investment property
number one here, but even at this stage, I would love you to start to think about how
you’re going to fund property two, three, and four, because what you do with this property
now may well affect how you’re able to move forward and fund property two, three, and
four. I really hope you found that helpful. Before
going, don’t forget to grab that free resource I prepared for you, the 50 ways or the 50
points, in a checklist format, that you should go down when buying that first investment
property. I’ve also got a couple of other videos that you may well find helpful here.
Please be sure to subscribe to this channel so you don’t miss out on any of the free content
that I’m sharing. My name’s Tony Law from Your First Four Houses, and I look forward
to seeing you in the next video. Thank you.