One of the biggest nightmares for a buyer is buying a lemon and taking a huge financial hit – and this happens too often because buyers get caught up in the excitement of the process and do not conduct enough due diligence before signing.
So what do you do if you feel you’ve purchased a lemon already? You’ve been waiting, hoping that the situation improves, but you feel like cutting your losses and getting out of the situation immediately, but you’re worried it’s not that simple. You may have even tried to sell already and feel stuck in the situation.
The first step is to get independent (non emotional) advice and to discuss the specific situation so that you can make a fully informed decision as to whether it’s feasible to cut your losses and to try to correct the situation. Holding onto a bad property for 5 years, could instead be 5 years of time to recover and start on a more positive path.
Do not rely on pure gut instinct or hope.
Just as having all of the fact and figures in front of use BEFORE we purchase may have resulted in making a different investment decision, any decision to backtrack and change our investment path must be done on the basis of having all of the facts and figures in front of you to ensure that we make the best, most fully informed decision when moving forward next time.
Buying a property is one of the biggest financial decisions you’ll make in your life. So it’s pays to invest in due diligence before you make any commitments. Investing a few thousand dollars up front may save you years of financial and emotional distress. Here’s a checklist of some of they key things you should be consider doing when re-evaluating your portfolio or when buying a new property:
- Financial Due Diligence – What if interest rates go up in 3 years by 3% will you be able to afford it?
- Mortgage – have you scanned the market to get the very best deal for your personal circumstances?
- Council Planning Law – can you develop, make changes to the property if needed? Is there development occurring in neighbouring areas that will impact on your property?
- Market Analysis – do you actually know the true worth of your property? Have you analysed recent sales, rentals, spoken to agents and landowners in the area and validated your market analysis?
- Rental Analysis – have you maximised the rental opportunity, can changes to the property, listing, sales approach improve your rental return. What can you do to improve the quality of your rental tenants?
- Neighbours – do you know who the neighbours are, is the neighbourhood complimentary to you lifestyle and interests.
- Strata Titling – do you know if there are substantial up and coming strata titling fees. Can you afford and have you planned for any maintenance costs?
- Selling – have you considered rent to own schemes if you cannot sell?
- Taxation – do you fully understand applicable taxation, land tax, capital gains tax and is your purchase tax effective.
The best way to handle all of these things is to engage a team of specialist consisting of a taxation specialist, financial planner and property investment specialist who will help you assess what’s possible feasible and profitable and to understand fully what you are buying before it’s too late.
As a property investing partner, the team at Newfandangled Properties can help you to identify the lemons – and guide you to invest in the right properties at the right price with confidence and put you back on track.
Contact Lesley on 0415 060 605 or firstname.lastname@example.org for a no obligation call to discuss how we may be able to put in place a strategy to help you improve your financial situation.