The acquisition of a property, be it for a home or an investment can be one of the most rewarding experiences in the modern world we live in. Pride of ownership coupled with the sense of accomplishment are often derived from the intimate knowledge of the amount of work, planning and sacrifice that has placed you in a position to be the successful buyer. Akin to the emotions felt as a teenager when buying your first car, our property purchase can and should be a chapter in life that is enriching in many more ways than just financially.
Whilst everyone has a different interpretation of what makes the perfect home or the perfect investment there are some common tips that should be considered by all who are planning to make a financial commitment of the grandeur that buying a property asset represents.
Please keep in mind that the 3 tips below are merely that. To turn them into a buying strategy, your individual circumstances, market conditions in your area of interest, as well as the national and global economy will also need to be given some consideration in your planning.
As a buyer the road ahead will require you to make a bunch of decisions. Some will be hard and some not, either way the tips below if followed with interest will provide you clarity of thought, and in turn allow you to make each decision in the timely manner that is often needed to be the successful buyer. In other words they can protect you from time wasting distractions and just as importantly they can help you act with determination when the property that meets your buying criteria is in your sights.
TIP #1 How much
How much can I spend? Our bankers usually give this limit to us. For those who are able to pay cash, this figure may come from discussions with your accountant or financial mentor.
How much do I want to spend? This is the amount you feel comfortable with, one that works within your risk tolerance rather that what you can borrow or how much money you have access to. If you imagine yourself owning a property to that value as you go to bed, will it keep you awake or are you going to sleep peacefully?
Does my budget include stamp duty, legal costs, and home improvements?
If you are an investor does it also include carrying costs should the property be vacant for an extended period?
If you are a first home buyer, have you considered council rate payments, insurance, electricity and water as well as your mortgage payments?
If you are transitioning to multi property ownership have you considered your land tax position?
Have I checked that my numbers are correct with a trusted team of professionals i.e. accountant and finance specialist?
Tip #2 Decide where to buy, what to buy
Now that you have contemplated the points in tip #1 and you have a budget in mind, it’s time to create more distinctions to help you buy right. For some individuals the location of where they live or invest is more important that the quality and quantity of space that the home has to offer. As an example this kind of buyer may choose to live or invest in a small apartment that has a vibrant village within walking distance. Others choose space and features. They might prefer a house that has a swimming pool but may be a car trip away from groceries and lifestyle. What is it for you?
Now that you have a more specific criteria in mind, the next step in minimizing your risk for error is to commit to be familiar and know your market. Visit at least half a dozen properties that fit your requirements, preferably within a short distance from each other (in some suburbs a street apart can represent a shift in values that an ill-informed buyer won’t know about). If you haven’t physically inspected at least 6 homes in your criteria chances are you don’t know the market. Should you find that the second or third home that you inspect is the one, then be sure to inspect at least another two or three during your cooling off period to place you at ease that you are in fact not overpaying.
Tip#3 Be clear on what you can and can’t change about a property
In our experience even perfect properties have a little something that can be improved. Sometimes it’s a big item such as a bathroom renovation or perhaps a change of paint colour is all that is needed for a space to feel just right.
This last tip can be the most detrimental for your peace of mind and long-term happiness in your buying journey. The exhaustion of looking at homes or in some cases missing out on a home will creep in, clouding your judgement. We have witnessed many buyers who have acquired a home for the sake of ticking a box and in turn have realised not long after that they have made a mistake.
Here is a simple rule to help you minimize your risk of buying something you cannot fix.
The question to ask yourself is can I fix it?
Is it something that with time and money can be fixed? Or is the obstacle something that is out of your hands, such as an irresponsible neighbour, noise pollution, poor light, land size, unwanted approved future development, etc, etc.
Hence it’s so important to take notice of things that you can and can’t change about a property. Take time during your due diligence to chat with neighbours, council and real estate agents, strata representatives. They are likely to share information that is not so obvious but most relevant when you are looking to buy a home.