Looking for investment property in the Perth area can be a daunting task for many. Sometimes it can seem like all of the good bargains disappear the moment they are up for sale, leaving little “wiggle room” for investors trying to find a bargain.
However, there are still plenty of bargains to be had. You just have to look one level deeper than most people are. The way to do that is to find properties that have problems that are keeping others from buying the property. The more problems you can find, the more leverage you will have to try and negotiate a lower price.
The Fundamentals of Selling a Property
Basically, when a property goes up for sale, it needs to be in the best possible state of repair. It has to look great, be marketed great and be priced appropriately. In addition, it should be vacant before the sale is settled. Any failure in any of these areas will cause the property to be on the market longer due to reduced demand. As we all know, reduced demand means we can offer less money.
How to Spot Properties with Reduced Market Demand
4 Weeks or More on the Market
Currently, any property on the market for longer than four weeks is considered to be “stale.” It will be due to one or more of the factors mentioned below. This is the “magic number” for the current market and represents a great opportunity to save money on the front end of your investment.
A property that isn’t marketed properly will usually take longer to sell (if at all) because everyone else is marketing correctly. If there are almost no pictures or just a bunch of bad ones, a dearth of advert copy and ads are only in Gumtree, the paper or a private sellers website, the property hasn’t been marketed to its potential.
Most people buy homes with their emotions and nothing turns off buying emotions faster than a home that is not presented looking its best. A home must be presented to the best of the seller’s ability or buyers will pass it over and buy a home that is.
People are busy nowadays; most don’t have time to do maintenance or renovations on their homes on the weekend. Often, even when they have the time, they don’t have the cash in savings to afford it. Consequently, most don’t want to buy property that they have to maintain or renovate themselves. This leaves you the opportunity to ask for a discount of 2-3 times the projected cost of repairing the property.
This is a great situation because it can immediately disqualify all buyers who need to move into their new homes immediately. That means pretty much everyone except investors. One loophole: see if the tenant is on a periodic lease. Often, the seller’s agent doesn’t understand the difference and doesn’t realise that in WA, a buyer can remove a tenant with 30 days notice upon buying a home where the tenant has a periodic lease.
Putting it Together
All of the scenarios above represent an opportunity to pay less for your investment property in the Perth area. It is our experience that these situations produce the best opportunities to negotiate substantial discounts in the current market.
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If you’re looking for a property bargain, give Investors Edge a call: 1300 472 427.