How to buy the best property in your range
WHILE all property purchases have their merits, they are not all equal. In order for a buyer to get the most out of their property purchase, they need to make the right buying decisions from the start to ensure they give themselves the best possible opportunity at a good return on their investment.
This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says although recognising and buying a home at a fair market value is a good start, it is not the only thing that will guarantee long-term appreciation on the buyer’s investment.
Buyers will need to apply certain principles and guidelines for property acquisition that would improve their potential for investment growth in the future.
He says sound property buying fundamentals never go out of fashion. These include key 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 a savvy investor makes a decision, he says.
Goslett shares a few tips that buyers need to consider when entering the property market…
1.Research and ask questions Before anything else, buyers need to determine why they are buying the property. Goslett says ask yourself whether the property is purely to live in or whether it is an investment property, as this will completely change the approach and how the property will be viewed.
He says if the property is for the buyers to live in, the motives and influencing factors on the decisionmaking process are more emotionally driven. The elements that will be important are the features and amenities that appeal to the buyer personally.
In instances where the property is bought for investment purposes, it is more important to research the demographic of tenants in the area and what would appeal to them, he says.
A buyer will be able to get a wealth of information online about an area, estate or complex. “That said, it is always best to go to the area and check it out personally. Drive around, walk the streets and speak to some of the residents currently living there. This will provide a good idea of what the area is like, the facilities and amenities on offer, and the demographic of people the area would most appeal to.”
Goslett says a real estate agent who specialises in the area will also be able to provide a comparative market analysis detailing the sell- ing prices of homes there over the last six months.
2.Subtle variances can make a big impact Although two properties can be located in the same region, they could differ in price based on the suburb they are in or even which side of the road they are on. Subtle variances in a home’s location can make a big difference to its potential for appreciation.
For this reason, it is best to buy the worst house in the best location, then the best house in the worst location — the home can be changed, the location cannot.
Goslett says a property’s selling price is linked to the demand in that area in which it is situated, so homes within sought-after areas will generally increase in value faster than homes in less appealing areas.
Goslett says buyers who buy an investment property with the intention of renting it out, need to consider that certain things appeal to some people and not others, so discovering their target market is essential.
He says investment buyers should also look at how much rental stock is available in an area before buying a buy-to-let property.
The rental market sector is driven by demand, and an investment could fall flat if there is an oversupply of properties available for rent in the area, he says. 3. Have a plan in place Property buyers and investors need to have a plan. Investors need to have a clear idea of what they want their portfolio to look like in the long term, and buyers need to know if the home they buy will meet their needs in five to ten years’ time.
“Having a plan and setting gaols will assist buyers and investors 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.”
4. Get rid of debt A key element to any property transaction is access to finance and affordability. While there are certain buyers who are able to buy property with cash, the large majority of the population rely on bond finance from a bank.
To improve their chances of bond approval and increase their affordability ratio, buyers should try to reduce their debt levels and keep their credit rating as high as possible.
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.
5. More than bricks and mortar While the potential to make a profit on a property purchase is often a driving factor in property buying decisions, it should not be the only factor that is considered.
A property is more than just a pile of bricks and mortar, it is a home and place where people live. Goslett says 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 needs to appeal to the buyer and they have to want to own it.
According to Goslett, a property that offers excellent returns over time is not just about luck and timing, it is much more than that. He says the most important aspect is to take time and research as much as possible.
It is never a good idea to buy a property on a whim without carefully weighing up each option, he says.
Before anything else, buyers need to determine why they are buying the property.