Plenty of Fish in the sea… (Or are there?)

 

Picking a builder is arguably more difficult than picking a wife (I am definitely in trouble for this one!).  There are plenty out there, so how do you pick one? More importantly how do you know if they will do the job right? Do you just choose one and hope for the best…

When people compare builders, often the builder with the glossiest brochure, trendiest display home or cheapest price wins! However not all builders are created equal!


Big isn't always better! Going with a well-known builder does not necessarily mean you will get a better product. Most of the time, a smaller boutique builder can offer a more personalised service and better value for money. Always do your research and speak to people who have used their services before to see how they found the experience. The horror stories I have heard regarding some builders are truly mind-boggling.

When comparing specifications and inclusions, make sure you compare apples with apples. You cannot compare on price alone. Make sure you delve deeper into what the inclusions actually are with each builder when you compare. Often some builders advertise saying all inclusive, but the price is well and truly hiked up because of this and you may be better off starting with a basic inclusion list and adding on upgrades.

Few other things to be mindful of when building:

Bigger isn't always better in terms of floor plans either. A functional floor plan that doesn’t stray from the norm, is often the best way to way to go. Have a look at a few display homes so that you can get your head around the size of rooms, lay out etc. Remember though; make sure you do not get sucked in to the sales pitches and the beautiful interiors. Display homes are designed to make you fall in love with the house, although most of the fixtures and fittings are upgrades that you need to pay an arm and a leg for!

Do not over capitalise even if it is your own home. Always have the resale value in mind. You may think you will live in the house you are building for the rest of your life, but circumstances can change, and you can outgrow the house. You do not want to add too many fancy things to the house that it is priced -out of the norm for the suburb you are in.

Your house should also appeal to a broad cross section of the market. While the house should be built to your taste, try not to get too outrageous with your specifications. A glass splash back for the kitchen with a picture of your pet may seem like a good idea to you, but I guarantee it is not!

If possible, try to be mindful of Feng shui concepts when designing a house.  For example the front/main door should not be directly aligned with another door or big window.  The front door should also always open inwards. A door opening outwards is pushing away most good energy, thus the house cannot benefit from good Feng shui. Even if you don’t care about these concepts, when you try to resell your home, a potential buyer may. Try to maximise as much natural light as possible for living areas and have good airflow. If possible, have two living areas, and at least two bathrooms. This will increase the value of the house tremendously.

Another point to note, do not underestimate the time it takes for the construction of your home. Allow for bad weather, holidays, title delays, supplier delays, etc. If you are going to rent while building, make sure you budget for at least an extra 3 months’ worth of rent, in addition to your full mortgage repayments.

As always, research is paramount in the property game.

To buy or not to buy that is the question

The last few weeks have been quite hectic for me personally to say the least! We put our house on the market, sold it and bought a property all within 4 weeks! While my wife and I were traipsing through open for inspections with the view to buying our next property, it struck me how different it felt when I was on this side of the fence…..Being the buyer….

 

I found I was looking at properties very differently to what I usually do. Whenever I inspect a property on behalf of a client, I have my trustee checklist where I allocate points to each room based on a pre-determined set of critical criteria. It’s all about the re-sale value, the potential for growth, rental demand, what works need to be done on the property, what and the list goes on….

The last few weeks I found myself looking at things like, where we were going to have our morning coffee, where my son was going to play cricket, where my other future hypothetical children would sleep, if my dog would like the house etc… all emotional, mushy stuff. (I’ll deny it if you ever ask me!)

Two completely different points of view, but both equally important when buying your home. I almost wished I had thought to bring along a buyers advocate, so that someone could look at things objectively and tell us where to draw the line without getting too carried away.

Luckily, my wife and I managed to get a hold of ourselves and be disciplined in our purchase, because we both firmly believe that you make money on a property at the time you buy. If you pay too much for a property, it can take years to recover from that set back. A home at the end of the day is an asset and probably your biggest asset. Why shouldn’t you buy wisely and make money out of it?

Due diligence regarding the area you are buying in, when and how often  the property you are looking at has changed hands,  comparable sales in the area, planned infrastructure upgrades in the area, transport links , access to schools are some of the critical things you should be looking at when buying your home.

Another tip to remember is, if you are buying at Auction; make sure you are very clear what your maximum budget will be. Better still get someone else who is not emotionally involved to bid on your behalf. The real estate agents will be in your ear all through-out trying to get you to increase your bid and it is very very easy to do just that when you can see the home of your dreams slipping away right in front of your eyes…

I am speaking from experience when I say; you make money when you buy, so buy wisely. If you are not sure, seek professional help!

Where do you see yourself in 5 years? What’s your five year plan? To be a Millionaire??

Following on from the previous blog post, let us assume you have a bit of money saved up, and have now decided to take the plunge and step onto the property ladder…. Where do you start?

Let’s look at a strategy that would be suitable for most young professionals. Say you are a young professional working in the city.

Strategy:  Purchase an apartment or town house ”Off the Plan” within a 10 km radius from the city for a reasonable price. In Melbourne, Maribyrnong comes to mind with it’s proximity to the city, great network of public transport and other amenities. Choose an area where you would like to live and where other like minded professionals would love to rent. That way, even if you want to rent out the property later on when you finally decide to take a different kind of plunge, tie the knot and get a Volvo (they are supposed to be one of the safest vehicles for the kids they say) , you will have plenty of people beating down your door to rent your property.

Why would you do this: (Other than the fact that you don’t mind renting now and don’t really want to have a mortgage right this minute!)

If you purchase a property ''Off the Plan'' with completion in 18-24 months, you can lock in today’s prices by signing the contracts and paying a deposit. If you can negotiate the deposit to be 5% of the purchase price all the better. You then have NOTHING to pay till the property settles in 18-24 months. That’s right NOTHING to pay !

You can pay the deposit via bank guarantee so that your money remains in the bank earning interest for you. Save as much as you can, so that come settlement, you can reduce the amount you borrow from the bank.

If you live in the property for 6 months, you can get the First Home Owners Grant. Buying off the plan will give you substantial stamp duty savings as well.

Say you buy a property with two to three bedrooms; you could consider renting out the extra bedrooms to help you with the loan repayments if you don’t mind sharing your pad. The interest on your loan and other property expenses are tax deductible proportionately. That is a great way to minimise the cost of owning your own home and still have cash to party all weekend!

If the Melbourne property market keeps going as it is, by the time you settle or a little after that, you could have accumulated a substantial amount in equity, which you can use to purchase your next property and the next one and the next one. There’s your portfolio of properties. If by this time, you have a family; you can use the equity accumulated to build or buy the home of your dreams, which probably wouldn’t be possible if you just save money in a bank account.

The key to this strategy is getting the FIRST PROPERTY AND GETTING THE RIGHT ONE at that. You NEED to purchase something, which ticks all the boxes to appreciate pretty quickly ( Let’s face it.. we are Gen Y and require immediate gratification.. We have no patience… ) to execute the rest of the plan. You also need to structure your mortgage right and make sure things are in place to ensure you are able to continue with the plan if you become sick or injured and are unable to work. We don’t want the whole deck of cards falling down on us now do we? (Therefore, do not attempt this strategy on your own at home! Get help! There are a few things to think of here).

This strategy could see you with 2-3 properties within 5 years.

Now doesn’t this sound like a good 5-year plan? Next time someone asks you where you see yourself in 5 years; you COULD say that you see yourself as a millionaire (or well on the way to being one).

 

Note to the Gen Ys’ – Investing in property and accumulating wealth DOES take time. It’s not a Get Rich Quick scheme, but it does work.

 

Are you like a frog on a lily pad?

If there are three frogs on a lily pad and two decide to jump off into the water, how many are left? One ?...... Wrong … Three!  They only DECIDED to jump, they didn’t actually do it!

Are you like the frogs on the lily pad? Have you DECIDED to do something but haven’t ACTUALLY done it yet?

Ever since you got into the work force you have been raking in the big bucks, but do you have anything to show for it? What assets do you have?  Your car? Well that’s a depreciating asset so it doesn’t count for much. You have been meaning to do something about actually behaving like an adult and maybe look at buying your first house or investment property, but have you done anything about it yet?

Maybe you have saved up some money and have been on the lookout for options. Maybe you have been crunching numbers on property after property but haven’t really committed and actually bought one yet. Why? What exactly are you waiting for?

One of the most common reasons why people don’t invest , even though they  WANT to and probably do realise that they NEED to is FEAR. Has fear stopped you dead in your tracks? Fear of not knowing what you are in for when you purchase a property? How the numbers stack up, how much out of pocket you will be. Fear of making a mistake buying the wrong property, Fear of the what ifs; What if I lose my job, get sick and have no income to pay for a property? And the list goes on…

So the answer is DO NOTHING…. Really ?

Once you have decided you need to do something about creating wealth, you need to take the next step, make a sensible plan and go for it with your eyes wide open. There are ways to mitigate the risks associated with investing ( which is incidentally why you need to speak to a professional and not try to do it yourself) so that you have all bases covered. The property market offers many opportunities to people who have the confidence and know how behind them to build up a substantial amount of wealth but only few actually have done it. Many decided to do it but didn’t.

Don’t be like a frog on a lily pad…  Take the next step and go for it… To all those who have been meaning to …. Go on take the plunge… I DARE YOU!

 

Why on earth would you use a Buyer’s Advocate when you can search on the internet and buy a property on your own?

So you have decided to buy your first home or an investment property and your weekends are full of open for inspections and talking to agents and trying to decide which property to bid on and keeping your fingers crossed hoping your offer will get accepted.
It’s easy enough to source a property that suits your needs from Real Estate.com.au or Domain websites or even local newspapers. After all you just decide on the suburbs, your budget, get a list of properties you like, inspect them, make an offer and buy the house right? Easy enough to DO IT YOURSELF….

However, do you know what you need to look out for when buying an established property? Do you know what price to offer if you decide to move ahead with a property? The guide price is after all what the Vendor HOPES to get, not necessarily what the property is worth. Do you know if your offer represents value for money for you? How do you ensure you don’t over pay or get carried away because you have fallen in love with a particular property? Do you know what clauses you need to put on your contract so that your interests are protected? Usually buying a house involves your emotions and more often than not people tend to go over budget or turn a blind eye on crucial issues with a property, which can prove very costly in the long run. If it is an investment property do you know if it ticks the boxes for good Capital Growth? What the rental market is like? What plans the government has for the area and what impact this will have on your investment?

This is where a non-related third party with a professional eye can make a world of difference. A Buyers Advocate can help you wade through the complex process of inspecting, assessing and negotiating on a property on your behalf so that you can rest assured that you are getting the best bang for your buck so to speak. They will be working for YOU, unlike the Real Estate Agents at open houses who work for the vendor. So you know that your interests are protected. They can come up with a Buy Strategy and speak to the agents to negotiate the best possible purchase price, which may even get you the property for less than the listed price.

Buyers Advocate fees are usually fixed upfront and the amount of money and time they can save you is usually several time more than their fee. So why on earth would you NOT use a Buyer’s Advocate?

If you are in the market, looking for your first home or even an investment property, speak to a professional who is in the thick of things with the property market and who can help you make the best possible decision on your purchase. After all buying a house is probably the biggest purchase you will make in your life and surely you do not want to make a mistake trying to DO IT YOURSELF… Do you?