When buying a property, it is important to have a strategy and conduct the appropriate due diligence to ensure the property you buy is a wise investment.
The fact is not all properties perform the same. That’s because a property’s value is determined by a range of factors which makes each property unique. In fact, fewer than 5% of all properties on the market at any given time are specifically suited for long term investment.
Before buying, there are a number of steps I go through with my clients:-
BUDGETING AND FINANCE
It’s imperative that before buying you seek independent financial advice and ensure that you have lending pre approval. With this in hand you know exactly how much you can spend which will help narrow the property search, saving numerous hours. Having pre approval also makes the negotiation and settlement phase of a transaction much smoother.
I don’t generally like making offers subject to conditions as this often puts me behind my competition.
Searching for the right property can be time consuming and can take several months so it’s very important to have a clear and defined strategy. My clients are usually busy professionals who are time poor. I save my clients time and money because I am in the market 7 days a week and often know what is going to appear before it does. I actively seek out off market opportunities that are not advertised or on the internet.
Property is about conversations and it’s surprising how many buying opportunities I receive simply by discussing my clients brief with those in the market. The best properties are usually gone early and never hit the market. Good agents always shop opportunities with professional buyers like me first.
HOW MUCH SHOULD I PAY?
Being a certified practicing valuer gives my clients a big advantage over most of my competition. In difficult markets having someone with experience counts. Buying a property at a discount to market value or knowing when to walk away from an auction is a skill that only comes with sound property knowledge and skill. It is critical to do your homework before buying and research comparable sales.
AVOID THE RISKS
Although most people understand the basics of what affects property values such as location and land size, many are unaware of the hidden dangers that can impact long term returns.
There are a lot of risks when buying property.
- Some buyers are fooled by a quick renovation makeover, disguising some serious building defects that reappear several years later.
- The type of title can have a significant impact. Do you know the difference between old law, torrens, stratum, strata and company share titles?
- Did you know that some banks won’t lend on properties that have an area of less than 50m2?
- Did you know that lending ratios can vary between postcodes you buy?
- Do you read the owner’s corporation minutes and interview the owner’s corporation manager before you buy a unit?
- Do you step out the boundaries and check the title dimensions before you buy? You might find that physical occupation is a lot less than what your title tells you!
- Do you check the affect of unit liability, restrictive covenants, encumbrances and easements on the property you purchase?
- What about the zoning, planning overlays, permit applications next door behind you, or do you assume your conveyancer will do all that?
With 35 years’ experience in property, I see the mistakes buyers make every day. When making such a significant investment, it’s imperative in my view to seek independent property advice. The risks are way to great!
Get in touch to see how Greville Pabst Property Advisory can help with your next property purchase.