Investor tip: Avoid ‘shortcuts’ in the buying process

One of the many things property investors seem to take for granted are pest reports, failing to take into consideration that the results could potentially make or break the property and ultimately affect the returns on the investment.

"I really urge everybody to never shortcut that process," Steve said. 

"Forget about the leverage for a minute, but just having that peace of mind that there is no structural issues or anything like that."

Aside from making sure that the property is free from any serious structural issues, pest and building inspections can also be used as leverage for negotiation.

According to the buyer's agent: "The pest and building [inspection] is obviously there to make sure [that the property is] structurally sound and highlight potential issues, but you can use it as [a] leverage. Sometimes, you go into a negotiation knowing well, 'I'm going to give you, Mr Seller, what you want, but there is the potential that I might ask for that back once I get pest and building report.'

"So keep the powder dry," Phil added.

"Solicit it up in terms of, 'Well, this [are] the problems that the report has highlighted and, as a result of that, we're going to be seeking a reduction of X," Steve said.

"Or sometimes, will the vendor fix? We've just got to also make sure, as with any negotiation, that we play it down to the wire. Sometimes, we've got to give a little to get a lot."

Tune in to The Smart Property Investment's portfolio update episode to know more about how the team plans to manufacture equity in their latest "cosmetically challenged" property to increase its value, as well as how they will make the portfolio cash neutral in the future.