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.

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.