What to consider when buying a property
By Bernie Tynes
Buying a property is most likely the biggest financial investment you will ever make. Here we look at the criteria for choosing a property or investment property and those factors that may affect potential gain.
- Growth Potential – does the area have a long history of capital growth through renovation or redevelopment? Has the suburb out-performed the average? Where within the chosen suburb offers the greatest potential growth (East, West)?
- Rental returns from the surrounding area. A good rule of thumb is that if a property costs $500,000, the weekly rental should at least be $500 per week
- Vacancy rates from the surrounding area (ie: how long will it take to rent the property out)
- Average rental times for the surrounding area (ie: how long does the average tenant stay)
- ABS statistics of dwelling rentals vs owner occupied – http://www.abs.gov.au/
- Property type – more people are trading their backyards for balconies so perhaps consider an inner-suburban apartment-style accommodation. Others prefer the security of upper levels vs street level accommodation. Inspect as many properties as you can in those areas that best suit your lifestyle needs.
- Affordability – you need to know what you can afford and this may include a pre-loan approval to include the costs associated with acquisition, potential rising interest rates, stamp duty, rates, conveyance costs, legal fees, corporate body fees and a financial buffer for rainy days
- Access to public transport – trains, buses, ferries, taxi ranks and the frequency of transport
- Proximity to local amenities – schools, shopping centres, movie theatres, restaurants, medical centres, speciality stores, banks, ATM’s, café’s, lifestyle choices (golf, community groups). Look at what makes the area unique, special or different?
- Property Size – Be aware that banks general won’t lend more than 80% on smaller properties of 40sqm or less (studios)
- Parking – Secure or street parking. This can depend on the age of the building and the relevant local government by-laws. Check the security of the building – remote access, gated, size of car bays (single or tandem)
- Surrounding noise levels (industry traffic, new developments, proximity to trains and arterial roads)
- Eco Design Elements – Green roofs, walls and facades can reduce energy consumption, improve storm water quality and even make building more resilient to fire threat
- Associated fees – corporate Body Fees, rates, repairs, letting fees, landlords insurance
- Controlling interests. Some developers retain 51% of the properties to control things like the body corporate etc.
- Who built the property (developer’s reputation – being aware of their track record of construction and workmanship).
- Tax benefits – Consider the benefits the property offers at reducing your annual tax bill
- Emotions – if it’s your own home, there will be a wealth of emotions whereas an investment property tends to be less emotive. Consider emotions as part of the purchase mix
- Pets – Does the property offer the option to have pets and how this may impact on future tenancy, if at all
The real estate market requires a team effort of expert input and advice from a qualified accountant, solicitor, financial broker and an independent property strategist who understands property cycles and locational factors.
At Infinity Property we have over 20 years of local Sydney market experience with established contacts to provide the right advice to enjoy the prosperity that property can bring. Call Michael on 0411 641 662 or (02) 9699 9179 or visit us online at www.infinityproperty.com.au
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Infinity Property Agents – Sydney