Not all property purchases are equal. Property buyers and investors need to have a plan. A buyer purchasing a home to live in will need to think about where they want to live for the next five or ten years.
While the emerging market conditions have created opportunities in today’s real estate sector, buyers need to be savvy and make the correct buying decisions if they want to get the most out of their property purchase in the future.
Buying a property at fair market value doesn’t guarantee that healthy returns will be realised over the long term. While an emerging market phase is an excellent time to invest in property, there are certain golden rules for any property acquisition that buyers would be wise to follow:
1. Do Your Research and Ask Questions
The first question that buyers need to ask themselves is why they are buying the property. Is it for them to live in or is it an investment property? This changes the game and how they might view a property.
If the property is for the buyer to live in, the purchase will be more emotionally guided and the things that will be important are the features and amenities that appeal to the buyer. However, if the property is for investment purposes it will be more important to research what will appeal to possible tenants in the area and who the tenants might be.
The internet is a valuable source of information and can be used to gain a wealth of knowledge with regard to the area, the estate or complex. However, nothing replaces checking out the location yourself. Ask your agent for a comparative market analysis and drive around, walk the streets, see what the traffic is like, and who your potential neighbours could be and what facilities and amenities are on offer nearby.
2. Small Differences Can Make a Big Impact
Often buyers underestimate the importance of location and just how much subtle differences between two areas can impact on the property price.
It is vital that buyers understand why property values differ from suburb to suburb or even in some cases from street to street. It’s better to buy a property that costs less but which is located in a sought-after area that offers more than to buy an expensive property in an area that has limited appeal. A property’s location will have more impact on its appreciation potential than the house itself.
Buyers who are looking at buying an investment property with the intention of renting it out need to remember that different things appeal to different people and that discovering their target market is essential. Investment buyers should also look at how much rental stock is available in an area before buying a buy-to-let property. This is a market sector driven by demand, and an investment could fall flat if there is an oversupply of properties available for rent in the area.
3. Keep It Simple and Get Back To Basics
Sound property buying principles never go out of fashion. There are fundamentals that successful property buyers keep in mind at all times. These would include aspects such as the property’s location, the value per square metre and the potential rental yield – these will always be the key criteria on which an investor makes a decision.
4. Have a Plan
There is a saying that failing to plan is planning to fail. This is especially true when it comes to a real estate purchase. Property buyers and investors need to have a plan. From an investment perspective, investors need to think about where they would ideally like their portfolio to be in the long term.
A buyer purchasing a home to live in will need to think about where they want to live for the next five or ten years. Setting goals will assist buyers to remain focused and will give them something to work towards. Buyers should never limit their thinking to what they can afford right now, but rather what will be possible for them in the future.
5. Dump the Debt
In today’s market the key elements to any property transaction is access to the necessary finance and affordability. Although there are a large number of cash buyers in the market, the majority of buyers will require financial assistance from a bank to purchase a home.
Buyers can ensure that their application for finance has more chance of success by reducing their debt levels and keeping a clean credit record. Having a deposit is also a must for those looking to buy property. A deposit will increase a buyer’s chances of bond approval and reduce their monthly repayment.
6. It’s Not Just a House, It’s a Home
While the potential to make a profit on a property purchase is important and is often a driving factor in property buying decisions, it should not be the only factor that is considered. The basic principle of buying a property is that if you wouldn’t want to live in it, it’s not likely many others would either. The property has to appeal to the buyer and they have to want to own it.
A property that offers excellent returns on investment is not just about luck and timing, it’s about much more than that. The most important aspect is to research as much as possible and not buy a property on a whim without carefully weighing up each option.
SOURCE: www.property24.com
