Investment Property 101
The Settlement Process
So you have just received word that your new investment property is complete and a settlement date is set. Now what? Before you pop the champagne and get the keys, there are a few key steps you must take to ensure settlement runs smoothly and on time.
When will a settlement date be set?
The issuing of the Code of Compliance will trigger the settlement date. You are often only given ten working days until settlement, so it’s important to get organized as soon as possible.
Re-engage a morgage broker
First things first, you need to touch base with your mortgage broker to make sure your finances are ready to go. While you may have already been granted pre-approval when you first made the deposit, some construction can take up to two years to complete so it is likely that your pre-approval has expired. Your mortgage broker will therefore need to go back to the bank to get reapproval for final settlement. This can take some time, especially if your finances have changed, so engage them as soon as possible.
Apply for a property valuation
Your mortgage broker will also require a Valuer’s Completion Certificate, which is crucial for the bank’s assessment. This certificate attests to the property’s value, confirming that it is worth a specific amount. Your mortgage broker will submit this certificate along with the updated loan application, to the bank for evaluation.
Before settlement day, a pre-settlement inspection will be organized. This is a final walk-through of the near finished property which allows you to check for any possible defects that you can raise with the developer to remedy before you are given the keys. You will be checking for cosmetic and structural issues such as making sure the sinks drain, there are no cracked windows, ensuring all the electrical sockets work along with the ventilation fans. If you do discover any issues, you will want to feed this back as soon as possible so that the developer can get it fixed.
This is a crucial step to prevent paying more tax in the future. Chattels encompass anything not permanently affixed to the property structure, including items like washing machines, dishwashers, microwaves and even carpets These assets naturally depreciate in value over time. Investors who account for this depreciation can effectively reduce their taxable income, making this a worthwhile endeavor to consider.
You need to ensure your new property is insured the day you take possession. However, in a new development of more than five properties, one insurance policy will be assigned to the group as a whole. You won’t have a choice here. Make sure you find out who is insuring the whole building, as you’ll need this information for landlord insurance.
day of settlement
This is the part you have been waiting for. The day has come when the money is paid, and the title is put in your name! Congratulations! You are the proud owner of a new property. Your property manager will have the keys ready for collection. Now it’s time to pop the champagne and celebrate!