With the continuous warming of the real estate investment market, the increase in various preferential policies for home purchases, and the huge profits of real estate investment, overseas investment has attracted the attention of more and more investors! So in the selection process, how can we avoid all kinds of detours and choose the best real estate?

Real estate investment is not a child’s play, avoid impulsiveness and sensibility. According to Mr. John, the financial planner, you must consider the following five questions before you finalize your purchase:

1

Is the purpose of the investment clear?

If you invest in a property without a clear purpose, it is likely to lose money.
Solution: To clarify the purpose of the investment, whether it is to sell, sit or wait for appreciation or use it, knowing this will help you to develop the right investment plan.

2

Is the rental rate good?

No matter how much you care about this property, as long as it is vacant, it will soon become your financial burden.

Solution: Do the survey.
“You can consult with real estate management experts about the rental needs and tenant market in this area. If many tenants want to rent such a home, then this is a property worth investing in,” added Mr. John. “At the same time, understand Rent vacancy rate. Search the current rented home through the Melbourne Times and compare it to the total number of rentals in the entire suburb (data available from the Australian Bureau of Statistics).

If the ratio is less than 5%, then the rental market at this time is very suitable for investment.

3

Is the location right?

As far as the same district is concerned, not all the plots in the district are the same, some neighborhoods are more sought after, and some are not. You have to make sure that your investment room is in the former rather than the latter.
Solution: Make sure the location is what buyers and tenants want. If you want to rent to a student, try to rely on public transport facilities and investment facilities in educational institutions. If you are a family tenant, it will be more attractive to be close to the school.

4

Is the transaction price reasonable?

House auctions can be confusing for investors, and if you are not well prepared, it is easy to spend more.
Solution: Do more research. Mr. John suggested that investors can browse sales reports in the suburbs, such as APM’s house price guide, or search online for the number of homes for sale.

If the number of homes for sale is less than the monthly average, the housing market is relatively hot, so you not only have to pay too much transaction volume, but also the future capital growth is likely to be limited.

5

Is the housing structure up to standard and is the legal procedure complete?

When your investment room meets the above four factors, you must consider the last element – housing structure and legal procedures, otherwise you will lose money, not profit.
Solution: Check before the transaction is completed. Conduct building inspections to ensure a stable structure of the investment house, check with local government agencies, and identify possible problems with legal procedures, as these issues are likely to hinder your investment room renovation or development plan.

What’s the next?
After considering all the factors and choosing your favorite residence, what should you pay attention to when purchasing? Among many of our customers, “overseas people” account for a large proportion. What do we need to pay attention to as “overseas people”?

The issue of “overseas people” can usually be classified into two categories:

First, overseas people who have obtained permanent residency in Australia (with a passport of another country)

Second, overseas people who do not have permanent residency or have a valid temporary visa.

Among them, overseas persons who have obtained permanent residency in Australia can purchase real estate in Australia without any special permission or approval, and can apply for local Australian loans.

However, overseas buyers who do not live in Australia and temporary residents with valid temporary visas must obtain approval from the Foreign Investment Approval Board (FIBR) for all types of property purchases.

In Australia, the government has always supported real estate as a major pillar industry, and every year it has taken a number of measures to support its development. One of the most important policies is to encourage overseas people to purchase Australian real estate as part of their personal portfolio. Overseas people can enjoy the same policy as Australian residents to buy investment houses when they buy a house, that is, national treatment. The only procedure that needs to be done more is to be approved by FIRB.

Property categories that can be purchased by overseas people

New house

A new home is an uninhabited home that has been newly built on residential land, is under construction or will be built and has never been traded before; or the home has not been used for more than 12 months.

Buying a second-hand renovated or refurbished property is not a new home. If you buy a second-hand house to rebuild, please refer to the second-hand housing redevelopment.
* New home transactions are the most popular type of property for overseas investors. Generally, overseas investors can purchase new houses unconditionally and there is no limit to the number and number of new houses, but they need to apply again.

Second-hand house

There are strict restrictions on the purchase of second-hand houses. First, the purchaser must hold a one-year or more Australian temporary residence visa (student visa, work visa); the second purchase must be self-occupied; in addition, the property must be sold three months before the visa expires. Second-hand property.
Second-hand housing redevelopment

For redeveloped residential projects, overseas investors also need to be approved by FIRB and ensure that the number of newly built homes is greater than the original number.

*FIRB’s principle of compliance with the application is to see if the purchase behavior has increased the Australian property, so if this condition is met, in principle, overseas investors can invest in secondary development of residential projects.

space

Generally, overseas investors who purchase open space will be eligible for approval. The specific conditions are that the land development and construction needs to be completed within 4 years and construction is required within 24 months after purchase. A completion certificate or proof of occupancy is required 30 days prior to completion.

About FIRB application

The Foreign Investment Approval Board (FIRB) does not issue any pre-approval documents, and all potential buyers must provide the specific address of the property to be purchased so that the approval committee can evaluate each application separately. The buyer must obtain the purchase approval before the purchase. If the purchase contract is signed before the FIRB approval, the contract must specify that the transaction will not take effect until it is approved by the FIRB. (Usually an approved response will be received within 30 days of submitting the application.)
Why do many people do not need to apply for FIRB before purchasing a first-hand house?

There is a concept we must be clear, FIRB approval refers to whether a specific house can be sold to foreigners, rather than whether the foreigner can buy this house.
We often hear that the first-hand house does not need to apply for approval from the SAFE, but the concept is actually not complete, because it is usually because the developer has taken the entire property they developed to the FIRB for approval. The Foreign Investment Approval Committee may approve the 80% of the property can be sold to foreigners, so the “illusion” given to us is that the first-hand house (new house) does not need to apply, but in fact these houses have been approved for sale to foreigners.
The reason why second-hand housing is usually to be approved, because the original owner is not possible to approve before selling to you. Therefore, the applicant must provide specific house information when applying for approval from the SAFE. If the approved house to be purchased is not bought for any reason, the applicant will need to apply for additional house approval.

FIRB exemption

If you meet any of the following conditions, you can get an exemption before you buy in Australia:

Australian citizens do not need to approve the purchase of residential real estate, whether or not they live in Australia;

Holders of New Zealand citizens and Australian permanent residence visas are also exempt from approval requirements;

Australian citizens, New Zealand citizens, and spouses of Australian permanent visa holders do not need to be approved for purchase of residential real estate as joint tenants.

Related violations

From December 2015, penalties for violations of the Australian Foreign Investment Regulations will include mandatory sale of property, a fine of up to A$127,000, and even a maximum of three years in prison.

In addition, other third parties that assist purchasers in violating FIRB regulations may also be subject to appropriate penalties.