There are a number of alarming red flags, experts warn when looking at an investment property. This being said, you have to work out which ones warrant further investigations, and which are a clear warning to stay well away.
In a recent article on Domain.com property investment strategist Lloyd Edge of Aus Property Professionals says, "Front of mind at the moment is making sure it’s not in a flood zone"
“Apart from the physical risk, there’s also the sharply rising cost of insurance. Other red flags include making sure a property is not on a busy road, but on a quieter street or in a Cul de sac and is preferably not out of the catchment area for good local schools, or not too far away from amenity. It’s also wise not to be right under a flight path.”
It is important to ensure prior to purchasing any property that a professional building and pest inspection from a reputable company is not skipped, either. These inspections provide vital information on any structural faults, large quantities of mould as well as black mould.
Edge states “It’s important to find out how bad that might be". An expert plumber they might say it’s easy to clean up and sort out, so you could use that in a negotiation with the vendor over price. Or they might say it’s endemic, in which case it could be a health risk, and it’s better not to buy. There are around 600,000 properties for sale in Australia across 15,000 suburbs at any one time, so there’s plenty to choose from.”
Water damage can be very expensive to fix, and sometimes building inspections won’t reveal it if it’s concealed behind an inside wall, says Stephen Timm, our managing director of Home-in.
“So it’s important to look out for small indications, like a freshly painted wall when others haven’t been painted,” he says.
“Illegal or unapproved building works is another danger, like a pergola out the back that looks as if it’s not the type that would be approved.
“With so many reno shows on TV, it’s been said that up to a third of homes now have illegal or unapproved building work. It’s also critical to check state regulations on rental properties – for instance, new Victorian standards around ventilation and dampness.”
Similarly, for apartments and townhouses under strata title, a good strata inspection is also something that should never be dismissed says Matt Trachtenberg-Ray, the director of independent inspection company I&D Strata Searching.
“There are obvious things like structural problems and any upcoming costs that don’t look like they’ve been budgeted for in the capital works fund,” he says. Many buildings have prepared reports on their capital works programs and, while some are diligently acting on their recommendations, some aren’t following them. For some investors, an upcoming $30,000 special levy could be an investment, and written off on tax, but not for others, while another red flag might be ordered from regulatory bodies, like fire orders. Similarly, some people might like heritage buildings but there can be significant costs involved for any work that needs to be done, engaging heritage architects.”
Get the right advice before making an offer on a property you’re interested in purchasing. Home-in connects you with a range of qualified services, from building and pest to strata and pool inspectors to help you get started.
Through our partnership with Before You Bid you'll receive discounted rates on property reports from over 400 inspectors around Australia.