8 things you must know before you buy a property
Given we have more than 10,000+ mini property markets in Australia, the market you’re planning to buy into could be running slow (like Ceduna) or rapid fire (like Bondi) but there’s a few key pieces of information you should have before you buy into any market at any time.
In our business we need to be really efficient in quickly finding and selecting the best possible properties for our clients. While we use systems and processes to ensure we can outperform the market, outlined below is a list of key pieces of information every buyer should have before they make an offer on a property.
This information should be used to help you sort the desirable from the troublesome options available on the market. Of course, there will be other specialist criteria you will add depending on the type of property you need to match your strategy – for example, do you need to be near a particular school or transport hub . . .but you will do well to collect the essential items listed below.
Yes . .the information is listed in the general order we use, although after we’re happy with the first four items we’ll collect all the remaining information at the same time, ruling properties in and out as we go.
Suburb features and ownership mix – ideally obtain insights into the changes occurring in an area such as new roads, transport, major developments (are there plans for high rise to be built), employment opportunities and also demographic information such as the percentage of renters versus home owners.
Suburb level pricing mix and demand – sure . . . obtaining the median price for houses v units is great to have but the reality is there is usually such a range of size and quality of properties in a suburb the median doesn’t really help too much. We always obtain information about the lowest priced and highest priced properties from recent sales. Also obtain information about demand – how quickly are properties selling (often referred to as DOM = days on market) and are vendors discounting heavily or not at all. This information will help you determine your offer price and conditions.
Property comfort issues – at this point you’re starting to narrow down your search and looking for reasons that will make your purchase ugly. Usually, buyers prefer to avoid living near electrical transmission lines, major rubbish tips, noisy manufacturing, plus tricky / busy roads. Other items such as schools, clubs / pubs, petrol stations might be a personal choice and will depend on exactly how close they are to the property you’re considering buying. The real trick here is to look at the property on google maps (or similar) and not just look at the property online where surrounding information is not visible. Checking these items online before you jump in the car to view the property will save you considerable time and help you focus on property that will really shine for you.
Potential – yes . .I can hear you. If you’re not already considering your next purchase as an investment and you’re actually looking for your dream home . . .what do you care about potential? Of course it’s your choice to disregard this step, but the reality is your home is a significant asset and if you have the opportunity to purchase one property that is 651 sqm over one that is 649 sqm, then you would be crazy not to aim for the 651 sqm option because it could make a major difference between being able to split the block or . . not. Your choice, of course. Other items in this category include zoning, shape, slope, floor plan and building envelope (ie – is the structure located to the front or back etc). We have more information on this topic in our blog How to recognise property potential.
Property features – starting with age and condition of the property as well as size and style, then if the reports are available review the building and pest reports, and strata reports. If this information isn’t available it will depend on the format of your purchase (auction or private treaty) and the area of purchase (which State – Qld v Vic) as to whether these inspections should be conducted prior to signing a contract or whether this should be conducted during the cooling off period. Just don’t skip this step as it is critical that the inspections / reports are completed . . .then make sure you read them and investigate any costs if issues are identified. Remember, you’re spending thousands so a few hundred is actually worthwhile to obtain the information.
Rental status – is the property currently tenanted and if so, when is the lease due to end. Once again, even if you’re buying your dream home, ensure you understand what the current rental return would be for your target property, and also the vacancy rate of the area. Anything under 2% signifies relatively good demand but above 2% should be cause to either cross the area / property off the list or investigate further. If you’re ‘presented’ a property by an ‘advisor’ and they offer you a rental guarantee, then this is also a red flag and cause for you to cross the option off your list. Good properties will not need a guarantee and you’re probably paying a premium if this is ‘included’ in the price. Do not get me started with this.
Contract conditions – if you’re very keen on a property, and you’re anywhere other than Queensland, request a copy of the contract and the associated documentation. This will include the vendors’ basic conditions (settlement terms) and also valuable information such as the zoning, and the all important sewer and services diagrams along with other key information such as caveats and covenants. If there’s nothing that would make you rule the property out, then you’re almost in a position to make an offer. After you have an agreement on key aspects such as price, the contract should be sent to your solicitor who will conduct further analysis into components of the contract and may negotiate specific points on your behalf.
Property specific infrastructure and development application (DA) searches – another critical step particularly in the current environment of major infrastructure construction around the country. At this point you’re looking to see if parts of your target property / land might be in line for acquisition by the government for activities such as road expansion or tunnel building. Usually this information will be included in your contract and your solicitor can provide insights, however this information can also be obtained from your local council or state government websites. Other searches to conduct include DA searches, easements and services.
Use the list above as well as your specific requirements to ensure you find a property that will work for you. A little bit of extra digging now will save you thousands now, and potentially make you thousands in the future.
Buy smarter = limitless ways to build lifetime income
Crave Property Advisory is a unique property strategy and buyers agent service. As the only independent and unbiased advisory that can help you use any property strategy Australia-wide, Crave’s services extend to home, investment and commercial property. A highly client focused organization, Crave developed the Modular Investing System (MI System) to provide clients with the ability to use a tailored mix of strategies and efficiently build profitable portfolios that create lifetime income.
Debra Beck-Mewing is the CEO of Crave Property Advisory, and has more than 20 years’ experience in property investing, Australia-wide. She has used a range of strategies to build her property portfolio including renovating, granny flats, sub-division and development. Debra is skilled in identifying development opportunities, and sourcing properties that have multiple uses and multiple exit strategies. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business.
Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.
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