How to buy and negotiate like a professional and bag a bargain
Buying property cheaply isn’t about ripping off unsuspecting sellers or finding a never-before-seen, too good to be true deal. Professionals make money from property by understanding the market and knowing what to buy.
It’s true that buying a property for less than market value does make you money, but as you can only buy the property cheaply once you will only make a profit once. A property in a bad area may be priced cheaply but if no one wants to buy or rent it from you, there is little chance of achieving significant capital gains.
A true bargain can be a regular priced property that has a uniqueness not everyone recognises. The truth is you have to spend money to make money. And if you understand how professionals buy and negotiate to get property slightly cheaper, you could bag the ultimate bargain.
This is a crucial element, so set aside a good amount of time. The first step is knowing what to buy:
- Are you investing for capital growth or for rental yield?
- Are you buying to hold or to renovate and sell?
- How much cash and income do you have available?
- How much time and effort you are willing to put into your investment strategy?
- My advice? Anyone earning a reasonably high income and who can service the cash flow on a property should focus on capital growth. Median priced properties that are closely situated to the main capital cities where the fundamentals of supply and demand are good are the most profitable purchases.
Next, do some research into the best suburbs to buy and the median price. There are free sources of information:
- Property websites
And sources where you have to pay:
- Australian Bureau of Statistics
- RP Data
In my experience, you get what you pay for so it’s worth investing in the most up-to-date and unbiased information.
In order to have a sound understanding of property values and what’s available in a new area, you need to inspect and analyse at least 50-100 properties. After your research, combine all the vital statistics on a spreadsheet and compare like with like. Consult with local real estate agents and property managers who can provide you information regarding what’s in demand.
Keep a financial perspective
Buyers can often get emotional over a property purchase, which can freeze their decision making. It’s important to remember to keep a financial perspective, as there’s a lot of money at stake. Property investors need to make factual decisions and to have a firm understanding of what to buy and what not to buy.
You get what you pay for
Everyone wants a bargain but the truth is you always get what you pay for. It’s important to concentrate on the bigger picture, and focus on the capital gain that you can accumulate in the long term. There are ways to get a property slightly below market value but purchasing a blue chip property in a blue chip suburb will give you the best returns in the long term. There’s a limit to how much you can save, but no real limit to how much you can make.