How to Buy Property that has Been Repossessed in Australia
The number of homes being repossessed by banks in Australia is increasing despite pressure from the government for lending institutions to apply a bit more leniency to homeowners who are just beginning to struggle in making their payments. Even with greater leniency of lenders, more properties than ever are being repossessed by banks.
Whether you’re looking to build a portfolio of properties to rent out, need a larger home, or are looking to move Down Under for the first time, the investment potential in many Australian cities is great, but buying bank repossessed property can be stressful and complicated at times.
Where to buy?
The majority of bank repossessed properties are sold at auction, and if you want to buy from an auction you need to have the money available before you start bidding. For people who want to buy property with a mortgage, you’ll need to have a mortgage in place from a lender, and a certificate that proves you are approved for and can obtain the funds if you win the auction.
Here are some tips for buying bank repossessed property in Australia:
Consider the Location
If you’re buying property to live in, the neighbourhood is extremely important. Is it located in an area that you want to live in? If you’re buying a property to rent out, consider the type of person or family who is likely to rent the property – and whether it is in a good location. Is it a small, affordable home near universities? Is it a large three bedroom house that a family would want to rent out – and if so – is it in a desirable school district and near the grocery store and family entertainment venues? Location is important, but how you determine whether a property is in a good location or not depends on how the home will be used.
Consider the Property’s Appraised Value
Is the appraised value of the property one that you’re comfortable with? Is it reasonable to think the property could eventually be worth more than it’s current appraised value after renovations? The answer to this question helps you determine whether a bank repossessed property is a good investment or not.
What Extra Costs Will There Be?
Visit any bank repossessed property you’re considering before you try to buy it. Look at everything from the roof to the electrical system to the plumbing. Look inside and outside. Try to figure out what kind of costs you’ll have to pay on top of the purchase price in order to get the home ready for someone to live in. Add these estimated costs to the purchase price to make sure you still feel like the house is a good investment. You can hire a professional to do this on a property you’re serious about – a few hundred dollars spent now could save you thousands of dollars in the future.
Consider Having a Professional Bid on Property For You
There are professionals who can go to auction on your behalf. Because they are not emotionally attached to the home, they’ll stay within your budget range and will not be carried away by a bidding war. They can also help you early on in the process by helping you determine if a property is worth the price or not.