Sales Contract

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The only good thing about mistakes is that we can all learn from them. 
Otium’s team of financial advisers, accountants and administration specialists guide clients through big property investment decisions on a day-to-day basis. They have also experienced the ups and downs of investing in property personally. We decided to round up the team and asked them to share the most common property investing mistakes and things to consider, so you can avoid making the same mistakes:
<h2>1.Fixing rates</h2>
“I remember pre-GFC when rates were high, I got caught up in the hype of needing to own a property.  The problem was debt was easy to obtain and I got a house way before I could afford it.  Not only was it outside of my affordability, I locked rates at a ridiculous 7.5%.  It was just not the time to be fixing and I was caught with high rates until I sold the house a few years later.  When in doubt, use the variable rate until there are extraordinary low interest times.  Even then, consider hedging your bets.  Use a good mortgage broker who is willing to advise you and always check with your accountant.”
CEO Drew Grosskreutz
<h2>2. Inspecting the property</h2>
“When making the biggest investment decision of your life, it sounds simple but care should be taken to fully inspect the property. Consider location, target rental market, condition of property and whether it fits in with your criteria, eg.new, near new, run down for renovation, etc.  Hire a professional building and pest inspector. No matter how new a property is, there could be an issue with the build that would not be uncovered in any other way.”
Managing Director of Accounting David Mason
<h2>3. Signing a contract without having discussed the correct finance clause</h2>
“When negotiating a finance clause ensure you obtain enough time for your mortgage broker to gain a formal approval, this might include a valuation and obtaining access via tenants which takes time. If the finance period expires without a formal approval, the agent may have been approached with a higher bid and you could lose the property.”
Finance, Gavin Frith
4.The Importance of Rent “Long term capital growth is the aim of many property investors, however, this strategy can be undermined if the property has poor rental yield (or worst case, struggles to rent at all).  Where debt has been used to secure the property, the rental income is used to manage the interest expense or depending on your specific strategy, can also pay down the principle.  Poor rental yield can force the investor to sell which could occur during a market dip, thereby destroying the original aim.
When looking to purchase an investment property it is imperative to research the rental yields on comparable properties in the local region.  This includes vacancy rates.”
Managing Director of Financial Planning Adam Storey
<h2>5.Getting the Correct Entity name for your Purchase</h2>
“It is vital to ensure the correct ‘purchasing entity’ is listed on a super fund property contract from the start.  This entity will depend on if you are buying with borrowing or buying outright through super.
This should be discussed with your adviser or contact as there are often various fees and charges to prepare a deed of rescission if this purchasing entity is not correct.  These fees can be between $200-$1000 depending on the deed required.”
For more information, <a href="https://www.otiumgroup.com.au" target="_blank">click here</a>.
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Sales Contract

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