Buying your first property is a huge deal, but deciding if you’re going to live in it or use it as an investment, by renting it out, is just as big.

Even real estate rookies know there’s a world of difference between being a landlord and an owner/occupier, with pros and cons to both, especially for first-home buyers.

Fiona Conley, a RAMS Home Loan Specialist in Canning Vale, Perth, explains.

There is a financial impact of both options. If you choose to live in the property, you may get stamp duty concessions and up to $10,000 from the government; if you choose to invest, you could potentially pay less tax via negative gearing.

Fiona says buyers need to balance what is best for them financially with their desired lifestyle.

Especially with your first purchase, there are pros and cons to being a landlord vs. an owner/occupier. Picture: Getty

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Invest first, occupy later

“In the Sydney and Melbourne markets especially, first-time buyers are savvy to the idea of buying a property as an investment first up, because it’s simply too expensive for them to buy in the area they want to live in.

“Rent-vesting is the new word, where people buy a property and rent it out straight away, but rent themselves somewhere else or even still live at home, which can be a big saving. This is a great way to get into the market,” she says.

However, rent-vesting does have its downsides. Using this approach could mean forfeiting a First Home Owner Grant (FHOG) and various stamp duty concessions offered by state governments, Fiona explains, because buyers only get “one bite of the cherry”.

As an investor, buyers could be eligible for some tax concessions, depending on how their affairs are structured. It’s possible to deduct interest on a home loan as a tax deduction against other income, and pay less tax, she says.

When selling an investment property down the line, capital gains tax could also be payable, Fiona explains. Being a landlord also comes with ongoing costs, such as management and maintenance.

As an investor, buyers can be eligible for some tax concessions. Picture: realestate.com.au/buy

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The amount of money a buyer could borrow also differs, depending on which option they take, Fiona adds.

“With RAMS, an owner occupier could potentially borrow up to 95% of the purchase price, but if it’s for an investment, that figure drops to 90%, so there’s an additional 5% deposit needed upfront for an investment property,” she says. “Don’t forget Lender’s Mortgage Insurance (LMI) may need to be included in your borrowing capacity,” Fiona says.

“There are so many things to consider, so we always strongly recommend people speak with an accountant or financial adviser.”

Learn from these young gun home owners…

Jamie Moller, a 23-year-old who recently purchased a two-bedroom villa with her partner in Sydney’s Sutherland Shire, wasn’t conflicted about the choice.

Jamie, who works in real estate, and her partner, 23-year-old electrician Taylar Garrett, were committed to being owner occupiers from the get-go, but have a plan.

“It was always going to be owner occupier for us, but down the track it will definitely become an investment,” she explains.

“We see this first property as a stepping stone, as it’s certainly not our forever home, but we wanted to get into the market as soon as we could,” Jamie says.

The plan is to live in the villa for two years and in the process, build up enough equity to buy a second property, which the couple will renovate, while keeping the first.

“I think we’ll hang onto this first property for 10 to 15 years,” she says.

Information in this material is general and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. You should also obtain independent professional advice relevant to your financial circumstances.

This article was originally published on
25 Jun 2018 at 5:30pm
but has been regularly updated to keep the information current.

If you’re shopping for a home, you may come across properties listed “as-is.” This means the seller isn’t making repairs or offering credits for defects and the buyer must be willing to accept the home exactly as it currently is.

In this Redfin article, we’ll cover what you need to know about buying a house “as-is,” and whether it’s the right option for you. So, whether you’re buying a home in Raleigh, NC, or a townhouse in Baltimore, MD, read on to learn about the term “as-is” in a real estate transaction.

What does “as-is” mean when buying a house?

Stephen Keighery, Founder of HomeBuyerLouisiana.com, says that “as-is” does not mean buyers ignore the condition of the property. “It means the seller knows we are not going to ask them to make repairs, renegotiate over every issue, or hold them responsible for problems after the inspection.” He explains that his team still has a general contractor complete a detailed evaluation of the roof, foundation, HVAC, electrical, plumbing, termite damage, moisture issues, and overall rehab scope. As long as the repair costs make sense, they move forward with the purchase.

When a property is listed and sold “as-is,” it means the seller will not make any repairs, nor offer any credits for potential defects of the home or grounds. Some examples of major defects that the seller doesn’t have to correct include:

• Structural problems
• Leaking or faulty roof
• Defective drywall
• Active termite infestation or damage
• Non-functioning systems (HVAC, septic system, etc.)
• Mold or mildew problems
• Presence of asbestos or other harmful materials

As a result, agreeing to purchase a property “as-is” is a serious decision for any buyer. In some instances, you may request an opportunity to inspect the property for informational purposes only, even though you’re already contractually obligated to purchase the property.

While unlikely, it’s possible that sellers may agree to a home inspection contingency, which allows the buyer to back out of the contract if the home inspection reveals major issues. Whether this is still considered an “as-is” sale depends on state law, so check with a licensed professional.

What does it mean if some parts of the home are sold “as-is”?

Sometimes sellers may identify specific aspects of a home being sold “as-is,” rather than the entire home. Common examples include:

• Fireplaces, chimneys, and flues
• Detached structures (sheds, garages, etc.)
• Household appliances (washer, dryer, refrigerator, etc.)
• Swimming pools, spas, hot tubs

In this situation, “as-is” refers to aspects of the property that may or may not be functioning which the seller will not repair or change as part of the contract of sale. Because this applies only to certain aspects of the home, it’s often less risky for buyers. However, the level of risk varies by property.

What does “as-is, where-is” mean in a listing?

With the inclusion of “where-is,” the seller indicates that the property must be accepted in its current location. In real estate terms, “where-is” effectively excuses any potential locational faults. Some examples include:

• The property is in a flood zone
• The property is not zoned for its current use
• The property is or may be scheduled to be taken by a government by eminent domain, right-of-way, easement, etc.
• The presence, or lack thereof, of restrictive deed covenants limiting what an owner may or may not do upon the property
• Inclusion, or non-inclusion, within a designated historic zone
• The property lies within an airport flyover zone
• The presence of some geological defect (inability to perc a septic system, elevated radon levels, shrink-swell soil, etc.)
• Title defects or disputes

Pros and cons of buying an “as-is” house

If you’re considering buying an “as-is” home, there are benefits and drawbacks to know.

Pros of buying a house “as-is”

• Lower purchase price: “As-is” homes are more likely to be listed and sell for a lower price. They are often in need of repairs, so sellers often account for this in the list price.
• Less competition: Buying an “as-is” house isn’t for everyone, so there’s a chance there won’t be as much competition for the home. 
• Potentially located in your preferred neighborhood: If you’re looking for a home in a specific area or on a plot of land, buying an “as-is” home may be a good option.
• Extra funds to renovate: “As-is” homes are often less expensive, meaning you may have additional funds to make needed repairs and renovate the home to your liking. 
• Faster homebuying process: There’s typically less room for negotiation between buyers and sellers, leading to a faster process. 

Cons of buying a house “as-is”

• Health hazards: One risk of buying a home “as-is” is the potential of health hazards, like lead paint, asbestos, or mold. You may face costly repairs to make the home livable. 
• Hidden problems: While a home inspection may reveal some issues with the property, it’s possible that there may be additional problems. 
• Additional expenses: As a result of hidden problems or health hazards, you may face expenses you didn’t have the budget for. 

Jonathan Cobey, CEO of CarolinaHomeCashOffer, says “one of the biggest mistakes buyers make with as-is homes is underestimating the true cost of repairs beyond what’s visible during a walkthrough. Cosmetic issues are usually manageable, but the larger risks often involve foundation problems, outdated electrical systems, plumbing issues, roof damage, HVAC systems, or hidden water intrusion.” He recommends getting a thorough inspection and walking the property with trusted contractors before committing so buyers can build a realistic repair budget upfront. 

• Inflexible sellers: Often, sellers may be inflexible when it comes to negotiating or making concessions, as they are aware that the property has problems. For example, they may be less likely to accept an offer with contingencies that allow the buyer to back out of the sale.  
• Financing hurdles: Some lenders may not agree to finance the home if there are serious problems with the home’s condition. Loans like VA or FHA may even require the repairs to be made before the sale can be completed. Buyers should confirm requirements with their lender.

Tips for buying a home “as-is”

There’s a lot to consider before buying an “as-is” property, and one of the most important factors is due diligence. Some examples of due diligence in an “as-is” sale include:

• Consulting with an attorney
• Having a title search performed
• Requesting the seller disclosure and reading it thoroughly
• Examining the deed and land records for potential red flags
• Inspecting the property prior to signing a contract
• Including a provision in the contract that allows for inspections and cancellation of the contract as a result of any inspection findings
• Commissioning a Wood Destroying Insect (termite) inspection in advance
• Having a licensed contractor examine the major structural components of the dwelling
• Consider purchasing a home warranty 

Derek R. Ballard of Inspection Gator Home Inspection advises buyers who plan to renovate an as-is property to evaluate foundation, plumbing, and structural issues before making any cosmetic improvements. Major structural or system problems can quickly consume funds that were intended for aesthetic upgrades. He recommends addressing the costly, essential repairs first before focusing on cosmetic changes.

Should I buy a home “as-is?”

Buying a house “as-is” isn’t for everyone, so it’s important to understand what you’re getting into. In many cases, you may not have the opportunity to walk away after inspection, so make sure you’re fully prepared for potential repairs and costs. At the end of the day, you’ll have to decide if the potential benefits of an “as-is” transaction outweigh the potential downsides and expenses.

For many agents across the country, the last year has been a tough one.

Elevated home prices and mortgage rates, a lock-in effect leftover from the pandemic and limited inventory have all made homebuyers and sellers hesitant to move. The result: Agents are running low on commissions.

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Those market factors have been gradually improving in recent months and economists say that as more inventory comes to market this spring, conditions will likely pick up a bit. But for now, many buyers are still bailing out of contracts, while others remain stuck on the sidelines.

So what can agents who need some income do right now? Inman spoke with agents across the country about which lead generation strategies are working for them right now in this market, and many said it’s the human-to-human touches that are proving most fruitful.

Lean on your sphere, including other agents

Carrie McCormick | @properties

Carrie McCormick of @properties Christie’s International Real Estate and her team have been talking a lot about lead generation lately, the team leader told Inman, thanks to the current market lull. Something that always seems to provide returns in one form or another is reaching out to individuals in the team’s sphere.

McCormick said they reach out to past clients to give them an update on the market and see if they or someone they know is interested in buying or selling now.

“[We’re] just kind of utilizing our own networks of people in sphere that we know,” she said. “Educating them on the market, where pricing is, telling them why it’s a good opportunity to sell now.”

In contrast to the heyday of social media marketing, Courtney Poulos of ACME Real Estate said that a lot of people are experiencing social media fatigue today, which is leading to better responses when it comes to tried-and-true lead generation techniques.

“A lot of Realtors have pulled back from their social media posting because it’s just expensive and doesn’t actually convert,” Poulos told Inman. “So I have seen agents leaning back into relationships like investing in sphere of influence, like higher-touch campaigns, actually making phone calls, taking people out to lunch, more value-added offers … So there are more platforms that agents in my brokerage use, but I’m seeing agents use more of nurture campaigns, even for sellers, just making sure that they’re keeping in touch with more people.”

Agent-to-agent referrals are also still a reliable, lucrative way to grow an agent’s business, and can be especially helpful in places where relocations to and from feeder markets are common. That’s why being polite and professional when working with any agent on the opposite end of a deal is important — if things go well, it could turn into a referral somewhere down the line.

“That’s been huge for me,” said Deborah Phantana of Group One Sotheby’s International Realty in Boise, Idaho.

Handwritten notes

Jeffrey St. Arromand | SERHANT.

In every building where a member of SERHANT.’s Team Tricia Lee is representing a listing, the team writes letters to introduce themselves to the neighbors. The letters also describe how the team might market the neighbors’ properties if they chose the team to represent them in their next sale, Jeffrey St. Arromand — a member of the team — told Inman.

“So that way, they know that we’re there,” St. Arromand said. “And then when we do our first open houses, we do something exclusively for the neighbors so they get to see how we would sell their property. That stuff is time-consuming, but it’s a necessary evil. And I think agents just don’t do it anymore … So use that extra half an hour, get the neighbors in, have some refreshments for them and tell them a little bit about what we’re doing to separate us from any other agent that they could potentially work with.”

Open houses

Although they can feel boring at times to sit through, many agents find that open houses continue to be a good source of lead generation, including Phantana, who said it’s one of the “pillars” of her lead generation strategy.

Christine Dupont-Patz | RE/MAX of Cherry Creek

Christine Dupont-Patz, broker/co-owner of REMAX of Cherry Creek in Denver, said that having that face-to-face time with potential clients can become an advantage to agents.

“You’re meeting people that are social, you are talking to people that are out and actively looking at houses,” Dupont-Patz said. “Yes, there’s a chance they may have an agent — they may not. So it’s the aspect of getting in front of people and having that organic conversation. I can tell you numerous instances where I held the open house, and I represented someone who just came in and said, ‘This is the house I want, this is what I’ve been looking for,’ and we wrote an offer, and sometimes they even had a house to sell. So it does happen.”

Dupont-Patz also likes to experiment with non-traditional days and times for open houses, because it opens up the possibility of catching a different group of potential buyers that might otherwise not be available on Saturday or Sunday afternoon. One of the busiest open houses she ever hosted began at 9 am on a Saturday, and she said may families with younger kids showed up because they were on their way to Saturday morning activities like sports practices and birthday parties.

“And the house had been on the market for a while,” she said. “It’s not like it just came on [market].”

Prospecting

Jonathan Spears | Compass

The lead generation strategy that Jonathan Spears of the Spears Group at Compass goes back to time and again is prospecting, he told Inman. It’s one of the basics that all agents learn about when just starting out in real estate, but its effectiveness can’t be denied. Spears said he sees most agents struggle with their deal flow after busier periods when they’ve neglected that prospecting for a time.

“The best way to gain market share, whether the market is fast or slow, is identifying a farm market that you work in and understanding who’s transacting in the market and why. Why did they transact?” Spears said. “And be able to stay educated on those numbers and then stay in front of active owners in that community.”

Spears added that he stays “hyperfocused” on a specific part of the market that only includes around 100 addresses or fewer.

“If you try to serve too many people, you’re going to be a jack of all trades and a master of none,” he said.

Buyer wish lists

McCormick said that advertising her buyers’ wish lists on LinkedIn or other social media outlets can also prove fruitful. Potential sellers are often more likely to list if they know there’s a real buyer out there who wants a home that’s like theirs.

Right now, many luxury buyers that McCormick works with in Chicago are looking for the same things, which is making inventory tight. Primarily, her buyers want something that’s move-in ready with high-quality finishes located in Lincoln Park, Lakeview or the Gold Coast. But if agents advertise buyer wish lists, it’s important to be honest about it, McCormick added.

“The important thing is to have integrity doing this,” McCormick said. “Meaning, don’t just put it out there and, say, pretend like you have buyers. You really have to deliver, too. So if you get that phone call from a seller that says, ‘I’m intrigued, tell me more about your buyer,’ you really should have one ready to go, because you don’t want to hurt your reputation by saying, ‘Well, I really don’t…’”

Storytelling

At SERHANT., which has its own in-house production company, content creation is a big part of marketing and lead generation, St. Arromand pointed out to Inman. So when it comes to more modern, fresh takes on lead generation, the team focuses on storytelling through content creation on social channels and commercials on specific streaming platforms.

“We’ve seen that be effective, not just for the property that we’re listing, but also the neighborhood that you’re going to move into,” St. Arromand told Inman. “So really trying to create what the entire experience will be once you choose to move into the property … and really doubling down on that.”

The team typically focuses on two to three high-quality posts per week that provide value, rather than attempting to put something out there every single day that may not be as polished.

“We try not to do it just for the sake of having content every day, but making sure it’s something that, No. 1, reflects the brand and how it looks, and then most importantly, the messaging,” St. Arromand said. “I think the key on that, too, is everyone understands and knows the importance of content, but it’s the actual storytelling and being able to lead with the hook to capture that audience in the first five to 10 seconds.”

Staying active in interest groups

Phantana recently joined a mahjong group because the game has been trending, and a few people have already asked her about her services as an agent. Phantana said she has also long been involved in feline advocacy work. She serves on the board of directors for a local kitten rescue and is able to connect with a lot of community members that way.

Deborah Phantana | Group One Sotheby’s International Realty

“Locally here within my market, I’ve always had a lot of success and am still finding continued success with being a part of groups that have a like-minded interest,” Phantana told Inman.

Because of her involvement in the rescue, she was also asked to contribute a pet column to a local magazine with a wide distribution, and as part of that agreement, is able to advertise her real estate business in the publication as well.

Turning to AI

As more consumers gravitate toward searching for answers with AI tools instead of traditional search platforms like Google, St. Arromand said that Team Tricia Lee has also consciously tweaked its content so that the team is more likely to show up in AI search results as well.

Spears also recently leaned more into AI by creating an AI-powered real estate management platform called MyOps, which helps agents keep track of their production, clients, finances and more.

“I look at MyOps, and it shows me at a glance where my team’s at,” Spears said. “And so I know how much we sold year-to-date or month-to-date or week-to-date, and I’ve got a real-time understanding of where the business is. So I’ll start looking at my business, and then I figure out next steps, how and where the opportunities within that business that are warm, that I can go out and farm.”

Courtney Poulos | ACME Real Estate

Meanwhile, Courtney Poulos, who said she has been very disappointed so far with most AI real estate tools, finally found one that she thinks is worthwhile, and helps with lead generation. AtllasX is an AI assistant for both outbound and inbound calling with potential prospects. Agents can upload a CSV file to the platform, and the assistant will contact prospects on an agent’s behalf to do things like offer a free home valuation. Poulos also gave it a trial run on her podcast recently.

“You can choose the voice, you can choose the prompts in the script,” Poulos said. “It has some defaults in there. It’s made for real estate agents, so it already has some good defaults in there.”

“I think this could be a useful use of AI because it doesn’t cost you much and you can see the accountability without having to rely on the third party, who may or may not be doing what they say they’re doing,” Poulos added.

Going the extra mile

Dupont-Patz said she also likes to do surprising, but useful things for past clients to let them know she’s thinking of them. These methods also typically help generate a more enthusiastic response from clients.

One time when she saw a client post on social media about having a bad day, Dupont-Patz decided to buy some vodka and sparkling lemonade and drop it off at their house. “It was the sense of, ‘Life is clearly giving you lemons, so here’s some lemonade,’” she explained.

This time of year, she also tends to distribute windshield wiper fluid, which comes in handy for Colorado’s more wintery days. With the bottle of wiper fluid, she also includes a card that says something like, “I can help give you a clear view on the market.”

Email Lillian Dickerson