GETTING STARTED IN THE REAL ESTATE GAME

April 21st 2006

Getting started in property investing can be confusing and costly if mistakes are made, but with careful planning and first-class market information, kick-starting your financial future can be a breeze.

Property buyer's agent Liz Sterzel of Property Wizards said the first decision for first-time investors should be to decide on their budget - and then stick to it.

"It sounds obvious, but in a booming market such as what Perth is experiencing, knowing your budget, and getting pre-approval for your loan in writing so you can put in realistic offers with confidence is absolutely critical," she said.

"Another common mistake is forgetting to factor in purchase costs such as stamp duty, mortgage costs and settlement costs."

Ms Sterzel said investors needed to carefully consider why they were buying and what they expected from their purchase.

"There is a huge difference between buying a home and purchasing an investment - the best opportunity for capital growth may not necessarily be the newest, nicest property," she said.

"However, there are issues to consider such as if you are willing to undertake renovations, how much maintenance you want to deal with and if you want to manage your own investment.

"All of these decisions play a part in deciding whether to buy a house, unit, townhouse or any other property that best suits your needs and budget."

Ms Sterzel said limiting your search for an investment property to one or two suburbs was ideal, especially for new investors.

"It's imperative to know as much as possible about the area you're wanting to buy into - including that you can afford to buy the specific property type you want in these suburbs - if not you may need to look to a suburb further out or look for an older property," she said.

"When you've chosen your target suburb, the next step is, knowing the right price to pay for any property.

"The only way to ensure you can accurately assess how much to offer is by looking at 50 to 100 properties in that suburb and assessing their eventual sale prices, with the aim of being able to walk into a property and know what it is likely to sell for within a few per cent."

Ms Sterzel said once buyers had found a property they were keen to purchase, they should decide what it's worth in the current market and make a good offer, being careful not to overpay and ensuring you have the right terms and conditions.

"The key in a hot market is to act quickly, but to not get carried away with the hype and jeopardise the performance of your investment by overpaying just to get into the market," she said.

"Watertight research and data are critical in property investing, and there are a raft of ways to access such information, so don't be afraid to seek expert help if you're not sure as it can save a lot of headaches in the long run."

She said another crucial piece of advice was not to try and time the market.

"Competition may well be fierce for property at the moment, but holding back believing there will be a better time to buy can leave you wishing you'd got in sooner as prices continue to rise out of reach," she said.

"Fear and indecision can have a huge cost in real estate, as can delaying buying in order to save a bigger deposit.

"While this sounds like a clever strategy, it can hit the hip pocket hard as you can miss out dramatically in lost equity and capital growth."

For more information, please contact
Mr Trevor Dunkley
Director
Property Wizards
trevor@propertywizards.com.au
Tel: (08) 9381 7450