What you need to know before buying your first property
15 May 2017
Whether you’re buying your first home, or purchasing your first investment property – here are a few tips to help you through.
Purchasing your first property is an exciting concept, but it can also present some challenges.
Whether you’re buying your first home, or purchasing your first investment property – we’ve put together a few tips to help you through.
Don’t listen to everything you hear
As soon as you mention that you’re looking to get into the housing market, you’ll be swamped with advice and comments from friends, family and colleagues. Although it’s great to hear the stories of their first purchase, or even their most recent one, it might not always be so helpful.
The market is constantly shifting, and advice based on experiences 20 years ago might not steer you in the right direction. Always pay attention, but don’t take everything you hear to be factual and current.
Working with experienced professionals will help
In conjunction with the point above, it’s not only misguided advice that you should avoid – you should also actively seek out the advice of real estate professionals with industry knowledge. They know the market, will listen to your needs, and provide as much assistance as possible.
Choose the right agent to help you
There are many agents across Australia. Speak to a few of them and select the right one for you. Consider if they work for a company capable of supporting you in all your future property needs.
If your first purchase is an investment property, then working with a real estate agency that can also provide you property management services could help make the process as easy as possible.
Don’t be afraid to negotiate
Real estate agents can be worth their weight in gold when they help you negotiate the best deal for you. This is another area where it’s a good idea to consider professional help.
You need to look for potential issues
It’s easy to get carried away with everything you love about a place, but it’s important that you analyse it for potential issues as well. Smell for mould odours, knock on walls to gauge whether they’re hollow or not, open the dishwasher to see the inside, check the flush on the toilets, and turn on the heating or air conditioning to see that it’s still working.
Whether you’re planning to live in the property or rent it out, identifying potential issues as soon as possible is important. They may not seem like huge problems, but if you need to fix several of them simultaneously – you could end up being very out of pocket.
It’s not guaranteed that you’re eligible for a home loan
Many people assume they will be eligible for a home loan no matter what. This isn’t the case, and assuming it is could create challenges for you later. Research this before you start your house hunt. Seek out pre-approval for a loan prior to making any decisions about purchasing.
Carefully consider what you can afford
Determine your budget based on what you can afford to repay now, not the maximum you’ll be able to borrow. Don’t buy anything based on projections about your future income. Circumstances change, and problems can arise, so don’t play guessing games with your finances – be sure you can afford what you purchase.
If your budget is going to become more stringent once you’ve got a mortgage, try living within those confines for a few months and see if it’s feasible before you take the leap.
Explore additional costs
This point relates to considering what you can afford. You need to weigh up the additional costs that relate to becoming a homeowner – like insurance. If something goes wrong, having the funds in your bank account to cover you can be difficult, and part of owning a property is knowing that you can maintain it. For this reason, securing adequate insurance is essential.
If you’re planning on living in the property, being incapable of fixing or replacing something when a problem arises could have a severe impact on your quality of life at home. If you’re looking to become a landlord, you may be obligated to make repairs to ensure the property is inhabitable for tenants – so you’ll need coverage to ensure that you can act on this duty when necessary.
Little Real Estate is partnering with EBM to deliver affordable insurance policies for property investors, with additional coverage and discounted rates available to our clients. These policies will be available from June this year.
Carefully consider what you can maintain
If you’re planning to become a landlord, you probably won’t be looking after the property’s day-to-day needs. But if you’re planning on becoming an owner-occupier, you need to consider the level of maintenance your home will need – and work out if you can accommodate that in your life.
Everybody wants a gorgeous green garden, but do you also want to spend your weekends weeding and mowing the lawn? Consider what sort of maintenance you’ll need to do to keep the property liveable, and try to foresee if that’s feasible for your lifestyle.
Don’t rush yourself. Choosing your first property is a big decision. Allow yourself time to check out what’s available in your price range and get a feel for the value of places. The perfect property might not pop up immediately, or it may pop up immediately – but it may be overpriced.
Don’t get carried away with meeting a purchase deadline. Wait until you find the right place. Although, try to be realistic about your expectations. You may be waiting a long time if you’re looking for something that doesn’t exist. It’s important to know what’s achievable within your budget.
Location is key
The location of a property is very important regardless of whether you intend to live in it or lease it out.
If your first purchase is going to be an investment property, talk to your real estate professional about recommended areas to buy in that are likely to yield a good return on investment – and possibly grow in value.
If you’re planning to live in the property, you need to think about how the area will suit your personal lifestyle and needs. If you’re thinking of starting a family soon, maybe a bigger place in a quiet suburban neighbourhood with a great sense of community is for you.
If you love the urban lifestyle, maybe you’d compromise on the size of a home for its proximity to the bustling city. You might find your dream home design, but if it’s located somewhere inconvenient or unenjoyable for you, then it’s not your dream home. Location should be as great an influence on your purchase as the property itself.