10 tips to know/prepare before going property hunting (inspections)
“What did you do on the weekend?”
When my colleagues ask me this clique question on Monday mornings, I know they would normally expect standard answers such as “I went shopping, cleaning the house or just relaxing....” in order to go back to their desks and start staring their computer screens. But quite often my answer shocks their ears and makes them to confirm my strange answer by asking “What?” and/or “Why?”
“I went to property inspections.”
My husband and I regularly check property prices and often go to property inspections on Saturdays because we both are very interested in property market and also keep an eye on opportunities which can bring our goal (financial freedom) a bit closer. As a young couple from overseas and starting as international students, buying our own property was definitely not easy (is it easy to anyone these days?) but our strong determination and commitment helped us to purchase 4 properties and sell 3 properties within last 7 years, and on top of that, buy our own house in a nice and quiet area.
I believe that having a look around properties regularly will help us to get a feeling about the value of properties and property market performance, and also motivating to think about future. So I would like to encourage you to go inspections if you think about purchasing your first home or investment properties. It can be a fun.
Based on my experience, I would like to suggest to you 10 things to know and prepare before going to property hunting.
1. Be ready to visit at least 50 properties before purchasing ; You need to know what is actual value of the property to grab a good value of property so you need to compare location, price, size of property etc., with similar properties around. A few years ago, one of my friends proudly announced she purchased her first home at the first inspection. Guess what? She overpaid for the property and she found out through the recent bank revaluation that she hadn’t had any growth on her property after 5 whole years. So it is very important to put more time into inspections to get a good deal, even though it may seem troublesome at the time.
2. Location! Location! Location! ; An old property in a good location is always better to buy than new property in a bad location. It is best to avoid a busy road or street and also keep away from places that have a bad reputation with crimes, street fighter, etc… Before you make your selection, consider whether or not you can live in the house and area happily and peacefully until someone will buy it from you when you want to sell.
3. The first property, not the last one; Remember that the property is only your first one, not the last one. I have seen many cases where people think the property will be their last one and they will live there forever so they attempt over-stretch their budget. Don’t try/expect to buy your dream house from the beginning. Set realistic goals. If you make an affordable and manageable purchase at the very start, you can get your dream house in no time, but if you try to buy your dream house now, the daunting mortgage will eat at your life for a VERY, VERY long time.
4. Look for potential changes you can make to increase the value of the property in future; Look around and find out if there can be any potential changes to increase the value of the property. Empty storage in the garden can be converted into a granny flat which might bring you stable sweet rent. If there is any usable space that can be converted into a spare bed room or study, the changes will increase the property’s value.
5. Right stage /age of property; The property should have right stage or age. If everything is perfect and there is nothing to repair mean that you will most likely overpay for the property. You will pay for the previous owner’s work but more than necessary (more than if you did). However, do not buy a property that needs too much work unless you are a builder and know what to do. Dealing with builders is not always easy or pleasant and quite often you need to pay a lot more money than you should/expected.
6. Watch out hidden cost such as special levy, strata levy and available sinking funds; If you want to buy a unit, you need to find out if there will be any special levy coming up. Sometime you can find unreasonably cheap properties compare to other properties around because there is a hidden special levy waiting for the new blind buyer. Previously, my husband and I had to pay more than $10K for a fire system upgrade for our units. Anyone can see that it was quite a large sum of money to pay from our own personal savings. Can you imagine what it would feel like if you need to pay a special levy by the due date while you struggle to save even a little money after paying mortgage? It is not easy so better avoid. Find out what current strata levy is and how much money in the Strata sinking fund so you can estimate how stable the building management is and what can be future strata levy rate. Strata meeting minutes will be worth to look at.
7. Any potential development next/close to the property?; Look around if there is any new development next or close to the property. You don’t want to live in the property that will be constantly subjected to noise and dust. If the new building can effect on your privacy and convenience, it would be best to reconsider your choice.
8. Keep a reasonable level of privacy; We had to sell our first property because of this reason although it was in a very good location and had a potentially very good growth. Our bedroom window was facing directly towards the neighbours’ balconies and whenever they sat there and talked (only talked, thankfully), we wouldn’t be able to sleep because of the echo effect the noise had.
9. Any options to pay off mortgage faster; If you are alone or a couple and ready to sacrifice a bit of your personal space for a while to pay off your mortgage faster, you can get a flatmate which we did at the beginning (We could put most of our salaries into our mortgage so we now mortgage free.). Therefore, a 2 bedroom unit will be better option than only one bedroom unit.
10. Parking on title; Make sure that parking is on the tile. In Sydney, the value of parking spaces is about $40K to $200K and it is a very important condition for resale of the property.
Don’t be shy to ask questions to the agent who shows the property. The more information the better chance to buy a good property. So now that you have these 10, are you ready for the house hunting?
2 comments:
Great post. Best point is "not to overextend yourself" because of wanting to buy house for life. Better to move up as your needs are growing and start with something manageable. There is no capital gain tax on primary residence anyway.
why9to5
Hi why9tp5
Thanks for your comment. I hope the tips can help people who wants to buy a house for their bright future not push themselves into the financial swamp. cheers
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