Buying an investment property is a relatively easy process; however, it's your ability to negotiate successfully that can give you the upper hand and save you tens of thousands of dollars.
Strategy 1 - Become the expert
Before you start the negotiating process on a specific property, you need to study the chosen area of interest for some time. Understand what the best streets are in that suburb, where the schools are in relation to the property, and where the childcare centres, shopping centres and other infrastructure that support the local community are located.
This knowledge makes the property choice easier, as you have a detailed understanding of the suburb and what makes it attractive for people to want to live and rent there.
Strategy 2 - Know what the other party needs
It's important to understand what the vendors need and their constraints when negotiating. This way you can formulate your strategy to provide a win/win outcome.
Strategy 3 - Use time to your benefit
To gain the upper hand in your negotiations, the only person that should be under pressure is the vendor. If you find yourself under pressure, then you're in a vulnerable position. To overcome this, use time to your benefit by setting deadlines with your offers. Add an expiry date so the vendor is under pressure to make a decision. A deadline on offers prevents the agent from having them silently bid you against other buyers in a quasi 'Dutch' auction.
Strategy 4 - Develop options
Give yourself alternative options by having a back-up plan or 'Plan B' if things go wrong.
If you go into negotiations without any other options and your offer is rejected, then you have nowhere to go and negotiations quickly come to an end. It's often difficult to come back to the negotiating table after you've failed the first time round, as it becomes difficult to regain your position of power. However, if you have other options or a Plan B in place, this makes you a better negotiator and gives you a stronger position.
For the complete article, read the latest issue of Your Investment Property magazine, on sale now.