Understanding Settlement Costs

Purchasing a property can be costly. It is something that you need to prepare for and think about thoroughly before buying it. You need to plan your finances and consider every expense that might arise along the way. Most first-time homebuyers often overlook one important thing when purchasing a property – settlement costs.

When they see a property, first-time homebuyers think that the purchase price is already everything that they need to pay for. Settlement costs can come as a big surprise that they have not been able to prepare for. Therefore, understanding settlement costs is important and should be part of every home buying journey.

What are Settlement Costs?

Settlement costs are the expenses above a property’s contract price that buyers need to pay to complete a real estate transaction. Meanwhile, settlement fees are usually settled at the very end of a real estate transaction when the title of the property is transferred to the buyer. Both the buyer and the seller usually incur settlement costs.

The total amount of a settlement cost ranges from 2% and up of a property’s total contract price although it also varies depending on the costs of different services in your location. Your loan type and mortgage lender will also affect how much your settlement costs will be. Stamp duty on the transfer is quite a big expense.

What are included under Settlement Costs?

1. Borrowing fees

These include costs for administrative fees, application fees, bank transfer, and everything that is related to the processing of your mortgage loan. Your lender might charge a loan application fee. Ask your lender about the details and the associated fees before applying for a mortgage.

2. Valuation Fee

The valuation fee is paid to a professional home valuing company or the bank that assesses a property’s fair market value to determine how much your loan to value ratio. The appraisal fee is a required expense as your lender would want to make sure that your home appraises for the price you are buying it.

settlement costs: miniature house with calculator and coins

3. Settlement Agent’s Fee

A settlement agent in Western Australia prepares all the documents for transferring the property from the seller to the buyer. They adjust rates and taxes and inform the appropriate bodies of the new ownership. They work with the lending company and follow the selling contract right through to the final settlement. Make sure you select an experienced professional company to act for you at settlement.

4. The Initial Deposit

Your initial deposit is held in a trust account by the selling agent or settlement agent. Until the contract is unconditional, it is paid out at settlement by your settlement agent.

5. Interest for Late Settlement

Make sure there is always ample time to meet all the requirements needed for settlement. Late settlements can cost interests that can hurt your budget for buying a property.

Learn more from your buyer’s agent

All this information seems too overwhelming, especially to first-time buyers or if you are inexperienced in the Real Estate purchasing system in Western Australia. Don’t worry as you can always seek help from experts. If you want to know more about settlement costs, let the experienced buyer’s agents at Buying Perth Real Estate help you understand.

Do not hesitate to give us a call at 08 6215 0200 or send an email to clive@buyingperthrealestate.com. We’d love to walk you through the whole property buying process.

How To Become A Successful Real Estate Investor

Investing in real estate is one of the most secure paths to growing wealth. When you invest in property, you can start a business, develop the property to increase its value, or even wait until the market value rises. Opportunities are endless when you are a real estate investor, however, you can also make mistakes when you don’t do your research and keep up with real estate trends. So how can you avoid these mistakes and follow the right path to becoming a successful real estate investor?

Follow these tips to become a successful real estate investor:

1. Create a Financial Analysis

Like any other investments, you need to have a plan. Real estate investors, even those who aren’t first-time investors, analyze their finances and set short-term and long-term goals. This will help them come up with a strategy on how they will achieve the return of their investment. Investing in real estate entails a lot of costs that need to be considered; hence, keeping track of your finances is a must. 

A financial analysis will also help you identify how you will finance your property and which property you can afford to buy. With a plan, you’ll be able to identify the next steps and narrow down your options in choosing an investment property.

western australia map

2. Choose a Good Investment Location

When it comes to real estate investment, location plays a big role in whether or not your investment will become successful. Make sure to choose a property in a profitable location. Once you’ve targeted a location, research about its current housing market trends like population growth, unemployment rate, and mortgage rates. Also take note of property prices, rental rates, price-to-rent ratio, tenant occupancy, and vacancy rates. Are there emerging establishments and amenities within the community? Determine how it will affect the value of your property.

3. Understand the Market

Understanding the real estate market will help you evaluate the real value of property in an area and identify where the demand is strongest. For short, learn to put your money where it will earn you the most in the shortest amount of time. If there is a high demand for studio apartment rentals, buy an apartment. If there is a high demand for family-friendly homes, invest in family-friendly homes.

Once you grasp the concepts of the real estate market, you’ll surely be one step closer to becoming a successful real estate investor.

learn to manage risks

4. Learn to Manage your Risks

When you know how to manage risks, you’ll avoid losing money fast. Managing risks when buying a property means analyzing the cost versus the return on investment rate of the property. Don’t just buy a property because it’s cheap, there might be hidden structural damages that could cost you thousands of dollars in repair.

Managing risks also mean avoiding going deeply into debt in terms of what you can afford. Be careful with your lender’s interest rate as it could eat into your profit margin. Make sure that you have a cash reserve in case you need to spend extra money on repairs, improvements, and other expenses. Don’t buy a property that is outside of your budget to avoid needing to suddenly sell it or foreclose it.

5. Maximize Real Estate Investment Potential

Aside from the current potential of your investment property, look for other ways on how to upgrade it and maximize its investment potential. If it’s a rental property, add more amenities or security features. It will also attract more tenants. You could use some space in your rental property to set up your own business – a small convenience store or a cafeteria. You can also offer services like trash pick up to your tenants and charge a minimal fee per month. Rent out a corner to a bank to install an ATM.

There are a lot of ways on how you can maximize your property’s investment potential aside from its current investment value. You just have to think it through.

an experienced buyer's agent

6. Hire an Experienced Buyer’s Agent

An experienced buyer’s agent will be able to help you in identifying properties with great investment potential. They have an extensive network and knowledge which they can use to find you amazing off-market property deals, negotiate the contract price so you can save thousands of dollars, and can check and handle all the paperwork for you. If you are looking for convenience and quality, hiring an experienced buyer’s agent will definitely give you value for your money and an investment that you won’t regret.

Becoming a real estate investor is not the same as buying your own home. In real estate investment, you’re putting out money with the expectation of getting more in return. The experienced buyer’s agents at Buying Perth Real Estate can help you find the best investment property. 

Let’s talk about how you can start your real estate investment! Give us a call at 08 6215 0200 or send an email to clive@buyingperthrealestate.com.

How To Build Wealth Through Property Investment

Have you ever realized that no matter how good your salary is, it doesn’t seem to be enough for you to achieve financial security? Achieving financial security and growing wealth through an average salary can be a big challenge, especially if you have many bills to pay. However, you don’t have to limit yourself with your salary alone because you can build wealth by having a property investment.

Having property investments is one of the most secure and safest ways to build wealth especially if you have long-term goals. Here are some reasons why you should consider investing in properties:

Why Invest in Properties

Property investment is safer and more stable than investing in a business or in any share. Real estate is bound to rise long-term because the supply of land is limited and will always be lower than the demand for it. Property investment is safe enough that governments and banks have created programs for people to be able to buy properties of their own. Everyone needs to live in a house either by buying or renting.

You might think that the only way to earn from your property is by selling it after several years, however, you can actually start earning once you buy a property. 

Ways to Build Wealth Through Property Investment

To give you an idea, here are some ways on how to build wealth through property:

Capital Growth

Once you’ve purchased a property, you wouldn’t immediately gain profit from it. You might actually spend money at first to pay off your mortgage, depending on your approved loan. On a positive note, you can eventually gain profit from your property because of its increasing value. Over time, real estate value increases; hence, your property wealth increases as well. This is similar to the idea of buying at a low price and selling for a higher price.

Aside from the increase of real estate value over time, another way to create capital growth is by doing renovations and upgrades to increase the value of your property. By doing this, you wouldn’t need to wait for a longer time for your property value to grow as you get to do something to increase its value and don’t need to rely on property appreciation.

Buying Direct Property

One of the best ways to invest in property is by buying a direct property. A direct property means owning a residential property 100% under your name. When you have control over your property, you can do what you think can get you the best return on your investment.

You can choose to live on the property and let its value grow. You can choose to get tenants or furnish it to have it rented as an Airbnb. Getting a mortgage is another option if you need to get cash immediately. 

It’s also important that you buy a good property that can last for years. Buying then selling properties to upgrade constantly can be costly in terms of fees and taxes. Experienced buyer’s agents can help you get a good quality home that would fit your lifestyle and needs.

Invest in Properties to Achieve Financial Security

Having financial security is important because it lets you live your life freely. You become at peace by knowing that you are secured and you have enough finances for your needs, emergencies, recreation, or for other purposes. 

With its fast recovery from the pandemic and its developing economy, Perth is one of the best places to build property wealth. To learn more about building wealth through Perth real estate, the buyer’s agents of Buying Perth Real Estate are more than willing to discuss with you. Call us at 08 6215 0200 or send an email to clive@buyingperthrealestate.com 

What Type Of Residential Property Is Right For Me?

Have you finally decided to purchase a residential property? The decision-making doesn’t just end on whether or not you should purchase a property. This is actually the starting point of many more decisions that you need to make on your Perth real estate buying journey.

Before you even start reaching out to your buyer’s agent, you need to decide on what type of residential property you want to buy. There are various factors that you can consider when choosing from the different types of residential property. Aside from budget, you need to consider your lifestyle, family size, needs, and wants in a home. Set your non-negotiables. This can help you decide what type of residential property is best for you.

To help you get started, here are 5 types of residential properties in Perth that you can choose from:

Single-Family Home

single-family home, one of the types of residential properties in australia

Single-family homes are one of the most popular types of residential houses in Western Australia. These are usually stand-alone houses or detached residences that have their own free-standing building. Buyers of this type of property own the land and can demolish, renovate, or choose to extend their dwelling as long as it complies with their local regulations. They can also choose to build either a single-story or two-story home.

This type of home is perfect for growing families with young children as it usually comes with more space and more privacy as well. However, it can be more expensive because of land rates and full maintenance costs.

Strata Residence

strata home, one of the types of residential properties in australia

A strata home is a type of residence that often shares a common wall with the house next door. Unlike detached houses, strata houses are often cheaper to build and maintain. However, they are usually smaller in land size than stand-alone or detached houses.

This type of property is perfect for a small family who wants more privacy than what apartments or flats can offer.

Duplex

duplex, one of the types of residential properties in australia

Duplex is a residential property that is composed of two homes in a single building. In Australia, the style of both homes is usually a mirror image of each other. Each home has its own door/entrance; hence, it can be occupied by different families. 

A duplex can be a great investment as it can either be on a single title or two separate titles. Therefore, it can be individually owned or sold. Most investors who plan to rent out properties also choose duplex due to the opportunity of having two rental incomes while having a lower land cost. This is because it requires less land than stand-alone homes. Some investors also use one side of the dwelling and rent out the other.

Apartment

apartment in australia

Apartments or flats are commonly found in more urban and commercialized areas where land is scarce and expensive such as real estate prices in Perth. They can range from studio flats to flats with several bedrooms. Some mid-range and high-rise apartments also offer excellent amenities and facilities.

Apartments are perfect for single individuals and small families don’t need that much space. It’s great for people who want to live in the city but can’t afford to buy stand-alone houses.

Townhouse

townhouse in australia

In Australia, townhouses are often found in the suburbs of major cities. They are more affordable and are considered a better choice compared to apartments. More townhouses are being developed in prime suburbs where the land is scarce and the houses are becoming more expensive. 

This type of housing is a great choice for small families who plan to upgrade from apartments and would like to relocate to prime areas or cities of Perth.

Buy a House that Suits your Needs

Whether it is your first time buying a house in Perth or not, make sure to research which type of dwelling fits your lifestyle. Think about your long-term goals and plans. Do you think an apartment will be ideal for your plans in five to ten years or are you thinking about growing your family? Proper planning and foresight are needed when purchasing real estate.

Once you have already decided on which type of residential property is right for you, reach out to an experienced buyer’s agent to help you find the perfect home based on your criteria. Buying Perth Real Estate has experts that have a vast knowledge on Perth real estate. With their constant monitoring of Perth prices, rentals, and sales, their expertise will make your buying journey hassle-free.

Before you start your search for your dream home or your investment property make sure you contact the most experienced Buyer’s Agent in Perth at www.buyingperthrealestate.com.