What is the procedure to buy investment properties in Adelaide?
0. Arrange finance through your preferred mortgage broker
1. Inspect the property and then call the agent afterwards to negotiate a price you can agree on.
2. Some agents will make you fill out an offer form and if accepted go to sales contract, some agents go directly to sales contract which you sign at the bottom and initial all pages and send back to them. On the conditions section, make it subject to finance if you need (but not building and pest, see step 5). Sometimes it’s best not to make subject to finance too, so that your offer appears stronger than other peoples but only do this if you’re very sure you can get finance.
3. If the vendor accepts it, they’ll sign the same contract and scan/copy it back to you. You’ll need to give this to your conveyancer and mortgage broker (We can recommend professionals in these fields if you need)
4. The agent will send you whats called a Form 1. This is a documentation package of all the title searches, council/water information, encumbrances, easements etc. You need to read & sign this and return it to him. This is similar to what conveyancers do in other states but here the sales agent provides it.
5. You have a cooling off period of 2 clear full business days from when he sends you Form 1. This is when you do your Building and Pest inspection. If it comes back bad, then you can pull out of the deal utilising the cooling off period at no cost if you wish. For this reason, you don’t need to put it as a conditional in your contract, because you get to exit anyway. Note that the vendor does not have a cooling off period, only the buyer does and for this reason gazumping is not possible here.
6. When you’re willing to proceed, ask the agent for his bank details so you can pay deposit and get a receipt. Deposit can be any amount and is not a fixed percentage like in NSW. In the past I’ve used $5k, $10k, etc. Some will ask for enough to cover their sales commission, in case their vendor doesn’t pay but I think its silly since its just going to sit in their trust account anyway.
7. Organise finance with your mortgage broker
8. Wait til settlement (42 days is common, but can be 30, 60 or 90 depending on what you negotiate)
9. Give your favourite PM (DT Property Management) a call to arrange tenants. Possibly even during settlement so that they can line tenants up for you ready for day 1 so you begin collecting rental income.
Please share with anyone you know who is thinking of investing in Adelaide rental property 🙂