Everyone has a different opinion on this topic, but personally I think you should only view up to 7 properties over a three month period. (You’re lucky if you found a property sooner!).
If you view more properties in this timeframe, then you could start to suffer from ‘buyer’s fatigue’ (and I’ve witnessed many friends and family members go through this).
Buyer’s fatigue is when you’ve viewed too many properties, and maybe even had one, two or three offers rejected. You become demoralised, tired, stressed and anxious – which ultimately leads you to purchasing a property which may, to some extent, fit your requirements for the present moment but, in reflection, may not have been the best investment choice.
“But how do I select 7 properties when there are so many properties out there?”, you ask.
Step 1: Know your budget and stick with it
Well firstly, and the most obvious point is to know your budget. Don’t forget to add extra money for additional expenses not included in your property deposit, such as: stamp duty, conveyancing fee, solicitor fee, mortgage broker fee, mortgage insurance, bank and valuation fees as well as the renovation costs.
I would also highly recommend, if possible, that you keep a small amount of savings aside because you don’t want to have absolutely no money in your bank account on the day you officially own the property. Admittedly, I have not followed this advice twice.
Twice, I was completely broke after my property purchase and it took me months to catch up on bills and living expenses. I had to borrow money from the ‘Bank of Little Brother’ just to keep up. So whilst I had a brand new apartment, I was also bringing home-made vegetable sandwiches to work every day – and not by choice.
Step 2: Identify the features you want in your ideal property
After you’ve set your budget, compile a list of affordable properties which have your desired features, such as the number of bedrooms, bathroom, garden, etc. Be realistic about the property features you want, and take note that some features can be added later.
For example, a large one bedroom can, if structurally possible, be converted into 2 bedrooms. Or, another ground floor room can be added if the property has a large backyard, and so forth. One of the first things I do when I view a property is knock on all the walls to identify which walls can be removed to create additional space.
Step 3: Apply the rental yield calculation
Once you’ve identified your property wish list, you should use the rental yield calculation to help you identify the properties which will make you the most money. Click here to find out how you can calculate the rental yield of your selected properties as discussed in my previous post.
Rank the rental yield for your desired properties from highest to lowest. The property with the highest rental yield percentage will give you the highest rental income return. Personally, I do not view properties with a rental yield of less than 5% – this is primarily how I’ve manage to select approximately 7 properties to view over a three month period.
Experts will give you an ideal rental yield percentage you should follow but I think it’s best to do your own calculations on a few properties in your desired location(s). This will help you determine the best rental yield average for your budget, property type (eg: apartment or house) and desired location.
5% is the minimal rental yield which works best for me as it allows me to pay the monthly mortgage, utility bills, agent and building management fees – all without having to use my own personal savings.
Please note, though I own a few properties, I am not a legal, financial or professional property expert. I’ve written this post to share my personal experiences and would love to hear your opinions and views.
So, what steps do you use when searching for a property?
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