How to buy the best prop­erty in your range

Lesotho Times - - Property -

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.

— Prop­erty24

Be­fore any­thing else, buy­ers need to de­ter­mine why they are buy­ing the prop­erty.

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