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.
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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.