We Wish Someone Told Us About
Investing in property can be nerve-wracking, exciting and confusing all at once; a concoction of emotions that can sometimes cloud our better judgement. While there is no magic crystal ball to foresee if you are making the right decisions, there are steps that you can take to minimise the risks and set yourself up to make a smart investment. Information about buying property is aplenty and can be overwhelming to the first-time investor, so we have compiled a list of common property purchasing mistakes (and ways to avoid them!) that we wish someone had shared with us…
- Do Your Due Diligence!
Whether you are purchasing your first property or your fifteenth, conducting research before jumping into a real estate opportunity is vital. If you are unsure where to start, begin by selecting a particular area or suburb that appeals to you and focus your attention there. Once you have a comprehensive overview of the region, it will make it easier to establish if purchasing in the area will be a profitable exercise, in addition to a rough price guide. Most of this information can be found online, with some of the points to take note of including…
- Recent Sales
- Median Prices
- Rental Market & Vacancy Rates
- Flood Zones
- Future Developments & Infrastructure
- Demographics
- Crime Statistics
- Zoning Regulations
- Be Budget Aware
Once you have been approved for a home loan, make sure that you also factor in the additional costs involved with purchasing a property. These costs are not always disclosed by banks or real estate agents and can be easily overlooked amidst the whirlwind process of purchasing a property. Before you sign on the dotted line, consider what will happen if your circumstances change and how this could affect your ability to make repayments. Some of the upfront and ongoing costs associated with purchasing property include…
- Loan Application/Establishment Fees
- Building & Pest Inspections
- Stamp Duty
- Conveyancing & Legal Fees
- Mortgage Repayments & Interest
- Insurance
- Council & Utility Rates
- Body Corporate Costs
- Location, Location, Elimination
The location of a property will have a significant impact on its’ worth, which is why we are always told to buy ‘the worst house on the best street’. While there are objective factors that determine the value and popularity of a particular area, the definition of what constitutes a ‘good location’ will vary depending on a buyer’s wants and needs. Avoid ‘trendy’ areas and look at what suburbs have performed well historically, considering the aspects of what constitutes a profitable location including ….
- Centrality
- Parks & Green Spaces
- Access to Public Transport
- Local Schools/School Catchments
- Shopping Facilities
- Views & Surrounds
- Access to Hospitals
- Town Planning Restrictions & Regulations
- The Heart Wants what the Wallet Cannot Afford!
It is easy to get wrapped up in the excitement of finding a property that you love, but you must be prepared to walk away if the numbers don’t stack up. You may have fond memories of a particular area or become enticed by the way a certain property ‘makes you feel’, but these instincts can cloud our judgement and lead to overpaying and poor investments. Avoid making real estate decisions based soley on emotion or any of the following…
- The lifestyle associated with the property
- Attachment to the property or area
- Cosmetic features of the property
- Aspects of the property that could be altered (e.g views that may be built-out)
- Outside influences & opinions of agents, family, friends, colleagues etc.
- Fear of missing out
- It is the first property that you have seen
- You are ‘fed up’ with looking
- Sitting, Waiting, Wishing
Contrary to the advice not to jump into anything too soon, it can be equally as detrimental if you spend too long looking for ‘the perfect property’. Any one property will never tick all of your boxes and the sooner you realise this, the more realistic you can be about purchasing. Waiting for idealistic market conditions is another trap that buyers can fall into, as these also do not exist. If you have found a property that meets your basic requirements, done your due diligence and worked through your financial checklist, you should not delay purchasing to…
- Find a property that fits every single one of your criteria
- The pretence that there is ‘something better out there’
- Find out election results
- Wait until interest rates are lower
- Wait for the market to turn into a ‘buyers market’ (you will be waiting a long time!)
- Look at too many properties (this can confuse things)
- Find a more aesthetically pleasing property (Remember, you can always change the look of a property but never the location!)