The step from tenant to potential buyer is a quick decision, but often a long road. When you finally make the journey towards owning a home, there are several important and valuable steps to keep in mind. Whether you are looking to buy property as a business investment, or investing your resources to building your first home, knowledge is power.
Know your market and your target. While the property search can be a nerve wracking, nail biting experience, it does not have to be, if you come prepared. Hudson Property offers these tips to help you to be organised and well advised as a first-time homeowner:
Develop a strategy
“Buy what you can afford and rent where you want to live”, is a useful motto to ensure you stay within your financial means and don’t miss out on getting into the market. Not all future homeowners have the luxury of being able to purchase a home in the suburb they want, or where they must live. Some work close to the city or have children in city schools, yet inner city home prices have risen at a phenomenal rate over recent years, and it is not realistic to expect many couples or families to afford or maintain a mortgage in these suburbs.
However, this should not deter you from entering the property market. You can still join the homeowners’ market by purchasing an investment property in the outer perimeters of the city. Some of the suburbs with relatively new homes and good infrastructure include Upper Coomera on the Gold Coast, Springfield Lakes, Warner, Albany Creek, Moggill, Springwood, and North Lakes. Meanwhile, you can continue to reside in a suitable rental in the suburb that you wish to live in. To make this work you would need find a home in an area with reasonable rental prices.
The government still offers generous tax benefits for investors and typically, newer homes have better tax depreciation benefits. The long- term goal here is to enter the market where or when you can, and gain equity on your investment property over time. There are many smart ways of using that equity when the time is right. The most important thing is that you have joined the market. History shows that despite a few short-term hiccups in the Australian market, we indeed have a buoyant industry that continues to grow. A property that is well located in populous outer suburbs with good property managers and good tenants is a solid investment engine to your dream home in the future.
Set a budget
Target suburbs and buy where you can afford, and find the best possible property within your desired location and budget. Do not get swayed by temptations and properties far exceeding your budget. It is important to come to the table ready with an offer that you can afford in pursuit of a property you love. Set your budget, and commit to it.
Check your financial resources, ensure liquidity and look into the available mortgage plans that the bank has to offer in the event that you find a property for purchase. Schedule a consultation session with your financial consultant at the bank to explore the opportunities available to you.
Even if a property or a particular neighbourhood does not impress you at first sight, dedicate another moment and look for the potential. Look into urban development plans to determine what housing projects are in the pipeline (if any) and what community facilities will be available to residents. When it comes to the property, keeping an open mind is especially important if you are looking for a house with distinct character. Often times, a quick refresh can prove to be the creative solution that transforms a property from potential to the chosen one.
Since you are ‘new on the block’, it is probable that excitement may take hold and you will not understand the market dynamics too well. Know the grounds on which you are submitting your offer or bidding on at an auction because the property market is highly competitive. ‘Information first’ is the best starting point. Do not shy away from asking for help; consult a local expert, ask fellow homeowners about their purchase process and seek the help of a seasoned buyers’ agent. You will also find many resources online. Three sources that we recommend are:
Do your research
If you have a preferred neighbourhood, look into the going prices for homes in that area prior to initiating the viewings. What is important for you to have in the neighbourhood? Perhaps a supermarket, health club, community centres, local shopping strip, cafe precinct. Are there good transport links? Think about what is important to you. You should also consider whether you are looking for a long-term home or a short-term investment that you will eventually sell, say within seven - ten years. Search online for properties in your desired area using leading portals where agents list the available properties, and make sure to set up an e-mail alert on new listings in your preferred area.
Make sure you consult a financial adviser from your local bank or mortgage lender. People are not always aware of the required deposit nor how much they can actually borrow from the bank, so it is important to do your research and come prepared. Showing up with a pre-approved mortgage agreement shows that you are a serious candidate and ready to proceed with the purchase. This will help you understand how much you have to work with and to buy a property that you can afford. If you are buying at an auction, you will require full approval from your bank before bidding and, if successful, you will be required to pay up to a 10% deposit on the day of purchase. Seek the advice of your solicitor as well as your bank before considering buying at auction.
Move-in or Must-Renovate?
Are you looking for a house that is ready to move in, or are you looking for a project that includes tearing down a few walls? Do you want a new home, or an old home? Figure out what kind of property you are looking for. Houses with authentic character have a lot of charm, just be sure that you inquire about long-term maintenance costs. If you prefer a stress-free experience, then you might want to consider a new home. On the other hand, renovations can be quite exciting, but it is a venture that requires patience and determination. If you are looking to buy an apartment, make sure you research the costs for body corporate fee, management/service fees, rates and water annual costs. Buyers are often caught up with purchasing a perceived bargain without truly understanding the annual fees, which can exceed $1,000 per month in some instances.
Work with an agent
Once you know what you want, it’s time to set up the viewings. Choose an agent who works in the target neighbourhood where you are looking to buy. They can offer good advice about the area and chances are, they will also know about unlisted properties that could be a potential property win for you. A good agent will also guide you through the purchasing process, from the paper work to the handing over of the keys.
Make sure to conduct a thorough visit of the property, pointing out any elements in the house that could be issues when it comes to negotiations and contracting signing. We recommend noting down the potential issues on paper so you can discuss them later with your agent.
Submit your offer
After you have considered all the practical issues and evaluated the property, it is time to make an offer. You should not feel pressured to submit an offer for a property you are not sure of, much less enamoured. It is better to arrange a second viewing before proceeding. This is a significant first investment so stay focused and be sure of your decision.
If you have found a property that meets all your ‘must haves’ and you’re ready to move forward, promptly inform your agent before it is snatched off the market. Avoid the game of ‘hard to get’ as the agent may be under the impression that you are not interested in the property, and you may ultimately lose out to the offer of another potential buyer. Many a buyer have missed the opportunity to purchase their dream home for not revealing their genuine interest in the property.
Make sure to present the pending mortgage approval and the timeframe you are looking at. Being a transparent and well-informed buyer helps to move the process forward, swiftly and efficiently. Be sure to follow through until the transaction is complete. It is the power of the follow-up and follow through that makes the purchase process a great experience.
To arrange a consultation meeting with Hudson Property, please contact us at: 1300 009411 or 0407288028