Property-hunting is a stressful exercise – you are embarking on one of the biggest financial investments of your life, and you know you’ll have to live with your decision every day.
Yet too many people rush into a property purchase, only to feel financially trapped in an unsuitable choice.
The problem is that many properties on the market are presented in an attractive and appealing way, prompting you to make an emotive impulse decision.
You can avoid the hazards of saying “I love it! Let’s buy…” about the first property you see, if you follow this 8-step preparation plan before starting the search to ensure you can identify the property that is exactly right for your needs.
- Residential or Investment
You probably already know the answer to this question – do you want a new home to live in, or are you planning to rent it out as an investment property?
Either way, you are making a long-term investment, so you need to plan carefully to ensure you can hold onto this property for long enough to profit from the appreciation in value.
Ask a mortgage broker or financial advisor for assistance in setting a limit for the maximum you can comfortably afford to pay for a new property.
Yes, it can be tempting to go over your budget if you find The One, but even a $50,000 increase in price can have a huge impact on your ability to comfortably cover interest payments and build equity.
If anything, set a conservative budget so you can manage the payments more easily and have some leeway for any future financial crisis.
Now you can start thinking about lifestyle choices!
If you have your heart set on an apartment, remember to calculate for body corporate fees as these can be a significant additional expense.
With a house, you need to consider how much additional home maintenance you are committed to completing – do you want your weekends to revolve around maintaining the garden and the pool? If not, you can look for a more low-maintenance home.
- Location, Location, Location
Next you want to identify the suburbs that are most suitable for your needs. Choose locations where the homes are within your price range, and then narrow down your search to incorporate essentials such as proximity to schools, shops and public transport.
Before you even look at any properties, work out how you will travel to work each day – is it a long commute? Will you spend long periods stuck in traffic? Are there suitable public transport alternatives?
If you are looking for an investment property, you need to consider these questions from the perspective of your future tenant.
What kind of facilities and resources will they require? What are your “must-haves”?
Before you start looking at houses, write down a list of essentials.
If you are buying the property as a couple, you should both write your own list and compare. For example, how many bedrooms must you have to live comfortably as a family, and perhaps also to provide a spare room for visitors?
Again, you need to consider these questions on behalf of your target tenant. If you are planning to use the property for investment purposes, your “must-haves” would include the utilities and amenities (such as air conditioning) that will make life more comfortable for a potential tenant.
Where will your furniture go? One of the best indicators that you’ve found the right property is that you can mentally place your furniture in the various rooms. Even if you are not sure, try mentally “walking through” the house, to figure out where you will eat your meals, where you will place the television and the computer and how you will utilize any outdoor space. This exercise will help you identify any potential issues with the layout of the property.
- Take some time to consider
Even when you are sure you’ve found The One, take some breathing space to think about it. While a property purchase is one of the biggest financial decisions of your life, many people rush into the commitment, without taking some time to think about the pros and cons of a particular property.
Walk away from the property, check your “must-have” list and your budget, so you can consider the decision from a detached practical position. Then view the property again to see if it still surpasses all your expectations. If you are purchasing as a couple and one of you has reservations about a particular property, then it is no longer up for consideration.
Before purchasing the property, bring in the experts. Have the house inspected for any potential issues with structure or electricals to ensure that the house is safe and doesn’t need any costly repair or maintenance work.
If you are planning some renovations, check whether you will be permitted to make the changes – if not, you might prefer to look for a different property.
Just as importantly, seek financial advice from a mortgage broker to calculate your best options for a mortgage so you can pay off the house more comfortably and efficiently with a minimum of financial stress.