There are a number of factors to be considered when looking to invest in the purchase of a property. The following should be carefully considered before making any purchase, regardless of whether it is your first or 101st property.
Always seek the advice of a professional
If you are looking to purchase a property, your first course of action should always be to seek the advice of a professional before doing anything. With the combined help of your accountant, finance broker, financial planner and solicitor you will be able to make well informed decisions and purchases that have a greater chance of long term profitability and capital growth.
Calculate ALL of the costs involved
Your team of professional advisors will assist you to calculate all of the necessary costs involved in your purchase. This should include not only the initial purchase price, but also the relevant taxes and ongoing costs such as maintenance and council fees. It is important to have a full cost estimate before agreeing to the purchase. Just because you have the money for the cost of the property does not necessarily mean that you can afford the whole package.
Tax obligations form a large part of the cost of purchasing a property. It is a necessity to be aware of the relevant taxes associated with your property purchase and discuss these with your advisors so that you can accurately assess whether it is viable option for you at this point in time given your current financial situation.
Ensure you can obtain finance
Although it may seem quite obvious, it is imperative that you know whether or not you can obtain financing for the purchase, particularly given the current harsh economic climate. Obtaining credit is not a simple task anymore, as the banks are tightening their lending criteria.
Without guaranteed finance, and credit for the right amount to cover your necessary costs, your property investment venture becomes unachievable.
Understand the legal implications of “exchange”
It is also important to understand the legal implications of an “exchange” as there is a common misconception regarding the execution and implications of this process. Many people undervalue the significance of this process. The exchange of property contracts is a legally binding event. Once exchange occurs you are contractually bound and cannot take the liberty of changing your mind or deciding to negotiate the terms of the agreement.
Therefore, it is increasingly important to be certain that all aspects of the property purchase are 100 percent signed off before each and every purchase proceeds and especially before exchange takes place.
The assessment and review of your financial situation should be evaluated and reworked in relation to the above for every prospective property purchase that you consider as each situation will be different.
As an integrated professional services firm, The Quinn Group provides the Total Solution. Our clients have access to a range of services that include: Accounting and Taxation Advice, Legal Counsel as well as Financial and Investment Planning. So we are well equipped to assist you with all of your property investment needs.
Michael Quinn, Director of The Quinn Group, is an experienced lawyer, accountant and educator. If you would like further information or assistance, Michael and the team of legal and accounting professionals at The Quinn Group can be contacted by calling 1300 QUINNS or click here to complete our online enquiry form.