Investors often talk of making their purchase decisions based on dollars rather than on emotions. However, in a competitive environment we often see investors get carried away and pay a premium for a property. This often happens when they are competing with owner occupiers at an auction and can also occur in a private treaty negotiation. Of course, it is a good idea to buy a property that has wide appeal (i.e. not attractive to investors only) as this is a better guarantee for resale value and that all important capital growth.
However, by being patient and keeping a keen eye on the market in which you wish to buy, you can resist the temptation to compete. Firstly, you need to have a thorough understanding of prices in your chosen location so that you can determine what is fair market value and when to stop bidding. Secondly you need to be vigilant in your search so that you are ready and waiting to pounce when you see a good opportunity. Once again, market knowledge is essential for you to be able to recognise that opportunity and have the confidence to act on it.
Sometimes it can feel as if you are never going to buy anything, but by being well educated and ready to move, you can be in a position to buy well. And one of the keys to a good investment property is buying it at the right price. Just remember though, there are very few bargains out there – we are advocating you focus on paying market value instead of an inflated price.
Published 18 September, 2010
DISCLAIMER: Please note: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.