Buying an investment property checklist

Buying an investment property is an important exercise to get right. By following these steps you’ll go a long way to help ensuring you have all your bases covered:

Set realistic and achievable investment goals

Understand the possible and likely costs, rental income and capital gains overtime. An accountant or financial planner may be able to assist you with this process.

Find out how much you can borrow

Obtain a loan pre-approval. It is helpful to know how much you can borrow ‘in principle’ before you start to look for a property. This will help you keep within your mortgage affordability range. Your borrowing power will be determined by your income, financial commitments, current savings and assets and credit history. Make an appointment with an IMB lending specialist to discuss your options.

Understand all the upfront costs

Apart from the actual purchase price, other key costs may include: taxes, stamp duty, legal costs and insurance. See our list of key costs for more on this.

Do your research

Obtaining accurate and credible information from reliable, recognised sources will assist you to determine the most appropriate market and property to invest in. This will include credible local real estate agents and online real estate sites.

Select your location

Choosing the right location will give you a better potential for price growth overtime. This is normally a result of local supply and demand, so consider doing your research on past sales.

Appoint a licensed conveyancer or solicitor

  • Appointing a conveyancer or solicitor provides you with the legal resources to get early advice on a potential purchase.
  • Conveyancing can include strata title searches, council building certificates, drainage diagrams and documents from the state traffic authority and waterboard. In addition, they will handle the exchange of contracts during settlement.

Select your property and make an offer

  • Look for a property that has strong local tenancy demand and owner occupier appeal. That way, if and when you decide to sell, you will have a property that is attractive for both investors and owner occupiers.
  • There are two types of offers: unconditional and conditional. An unconditional offer is an outright offer to buy a property and is the norm at auctions. You need to be 100% sure that this is the property you want to buy and that you have access to the finance to go through with the sale. A conditional offer is also a binding contract provided all the conditions are satisfied.
  • The contract of sale, prepared by the agent or vendor’s solicitor outlines the offer, the date of settlement and any conditions that must be met before the sale goes ahead.
  • There are two copies of the contract of sale, one for you and one for the seller. You both sign both copies before the contract is ‘exchanged’.  
  • You are usually required to pay a deposit (usually 10% of the purchase price) upon exchange. If possible, you may want to sign the Contract ‘subject to Finance and Inspections’, obtain a pest and building report, and ensure that you have full finance approval.

Get full finance approval

It is important that you get full finance approval so you can confidently sign contracts with the knowledge that you have the funds to settle the property. If you’re bidding at auction, it is essential that you have full finance approval before the auction, as a successful auction bid is binding.

Organise your insurance

Any insurance you decide to take out such as landlord, building and contents insurance, and personal income protection should be in place prior to settlement.

Settle your property

Settlement is the date you take legal ownership of the property, usually 42 days from contract exchange. This is when the balance of the purchase price must be paid. Your conveyancer or solicitor will handle the entire settlement process. Once the property is settled, you will start making your mortgage repayments.

Appoint a Property Manager

Successful property management finds and keeps your tenants happy and looks after your property. Managing your own property can be cheaper, but it can be complex and time consuming.

Obtain a Quantity Survey (QS) report

A QS is a depreciation schedule, outlining the tax-deductible investment property building, fittings, fixtures, and construction cost items. Ask your financial adviser or accountant about how to get the best out of your depreciation schedule.

Submit an Income Tax Variation Withholding Form

This Australian Tax Office form, if approved, will enable you to be paid your investment tax credits each time you are paid by your employer, rather than waiting to the end of the financial year for your refund. Again, talk to your financial adviser or accountant about whether this is an option for you.

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Important Information

Important Information

This article has been prepared by IMB Bank and contains general information only. It is not intended to be relied on as advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, financial, taxation or other professional advice before you make any decisions about your business. Consider the relevant Terms and Conditions or Product Disclosure Statement and Target Market Determination available here before deciding whether to acquire any products or services offered by IMB Bank. Lending criteria, terms and conditions, fees and charges apply to IMB loan products.